Re: Could a child fail a grading?
My dojo's kids classes have grades that start (I think) at 14th kyu, and they get to wear coloured belts. They are "kids" up to the time they finish primary school - after that, they can join the adult classes as a white-belted 8th kyu.
I'm not a fan of kids failing, but neither am I a fan of an automatic pass. Setting criteria ("You can't take your next grading until you can do XXX better" or "until you show more YYY") help alleviate some of these issues.