Order a squad to kill a merchant from your own civ in full view of as many people as you can manage, that'll start a loyalty cascade and maybe wipe out 2/3 of the population from the fighting and madness.
Ehh, I wouldn't do this. For one, Loyalty cascades occur when a dwarf is both a enemy and a ally of the fort, accomplished by being loyal either to the fort or civ and not to the other. The Dwarven Caravan is only loyal to one (The civ), so anyone who attacks them are instantly traitors, and yet due to their status as still allied to the fort, anyone who attacks in turn become traitors to the fort (and not the civ) and also marked as a enemy. This wouldn't affect children as much since they are all civilians and run screaming when a enemy (like the traitors) are visible. You can combat this by having the most skilled members of your military start it, and then, since they are still under your control for the moment, give them standing orders in the meeting hall or something. Also, The effects are hugely variable: You could end up with naught but a few dead military dwarves, to a culling of half the population, to nothing but a handful of dwarves who are no longer loyal to the fort and therefore don't listen to any orders, etc. It'd be entirely possible that if it happened at the right (wrong?) time,
no children would be hurt.
You want to know what kids do? They deconstruct. Build a tower or something (6 levels would be a good minimum, but it depends on how wide the tower is; the wider it is, the more likely kids will be under a floor or roof tile and be crushed, but it takes time), and them set them to unbuild it, all at once. It will come tumbling down and kill or injure a great number of the people there, either from fall or falling rocks (the taller the better.)