Ok, let's assume YT Kids will become big over night. And now every kid creator is there. But since there are no personalized ads, the creators have very limited incomes. So does YouTube. So nobody wins except FTC. I assume creators would want to look for another platform that somehow solve this age issue and let the creators make money. So YouTube should act fast and offer their solution. In September CEO Susan Wojcicki said YouTube will put $100M to invest in original kids content. Pretty vauge statement. She planned to share some more info, but it's almost December and we still now nothing more.
I think your assumption here is flawed. Contextual ads have been the funding source for network Television since the beginning. Yes, YT is spoiled on Targeted ads, but that does not mean there is not good money to be made on contextual ads.
It think if all kids content was moved to YT kids, it would force YT to focus and developing contextual ads for this huge market.
Think about this. The days of targeted ads to children are over. Not just on YT but the internet in general. Companies are NOT going to stop trying to advertise to kids and since targeted ads are not longer an option ANYWHERE, they will have to put all their money behind contextual ads.
The faster YT and YT kids creators stop fighting this, and start developing a safe market for kids creators and advertisers, the more dominate that platform will become.
I think there not only good money for kids creators on YT kids, but possibly BETTER money, because now they can work without fear and advertisers can do their thing without fear.