You can give your children gifts and an allowance.
Yey. There are skyrim mods that give you an occupation and workplace.
You can't have any children in Skyrim without the Hearthstone DLC or installing mods.
No and they also don't die.
Yes, there are children in most major cities (Holds). the easiest city to find them in is Whiterun or Riverwood.
The monsters could scare some younger children
Yes, it was. There are game data files and voice-overs in the Skyrim software which included animations of dying children and their dying noises. But the developer decided to cut out the ability to kill children and made them invincible, due to controversy.
No, you can't.
Give him a laptop with Reddit and Skyrim
It is part of the main quest. Delphine will give you this mission.
There is a mod for skyrim which allows you to give your horse armour (it makes your horse practically invincible btw), but without the mod installed, horses can't wear armour.
I'm hoping the coders at Bethesda will at least give you the option to use since they are responsible for the working of Creation Kit Skyrim.
Bethesda people said that it'll be out in 2013. They didn't give an exact date.