This is a topic on which I feel very strongly.
This is not an area in which a responsible rescue person ever takes a chance.
Any dog that lunges at children needs to be kept well away from children, full stop. Not simply because you would never know whether a dog doing this would bite -- in which case that would be the end of your dog in most cases, so who would ever risk such an outcome -- but also because a lunging, growling, barking dog of ANY size is absolutely terrifying to most kids and many adults. There is also nothing more enfuriating than owners saying, 'Oh he's fine, he's just all bark'. Even if he is all bark, this experience can be very upsetting to the person targetted.
If a dog is highly reactive, it needs training to deal with this, and/or to be managed in such a way that it isn't placed into situations where it will encounter children (eg not walked in public places and muzzled on walks). If people wonder why kids end up with a lifelong terror of dogs, an experience with a reactive dog, even if it is all bark, is one typical reason.
I already know of a cavalier that was placed into the wrong situation recently by someone else trying to do rescue, was reactive and nipped, and was pts because an adult insisted. On the flip side, a cavalier on its hind legs is well able of reaching a toddler's face. Even a cute cavalier has, as one dog trainer has written, a mouth full of the equivalent of carpet knives.
Neither situation, or the possibility of it arising, is acceptable in my book. Hence I temperament test every cavalier when there's any question of issues, and never place a reactive dog into a foster or permanent home with children.
