I've only read the first page or so of this thread, so I don't know what everyone else has said, but I've got two boys (5yrs & 2yrs) and they love sitting on my bike.
I have absolutely no issue if someone else's kid wants to sit on my bike. I'll even ask the kid if he wants to sit on the bike if I can see he's interested. But with this privilege comes responsibility. My rules:
1. Do NOT change the position of my mirrors
2. Do NOT wipe your hands/sticky fingers all over my mirrors
3. Do NOT twist the throttle (pretending is fine)
If the kid wants to touch something he shouldn't, I'll ask him not to. If he doesn't listen, privilege is revoked - game over - get off my bike.
This being said, I do have an XR, so a few light scratches don't really bother me.