A type 6 being afraid of something isn't exactly newsworthy. My take on the issue of children is more rational than that.
There is a fine line between respect and disrespect. Most children will automatically respect you, out of fear of adults or some other reason. So the respect or fear already exists on the other side of the fence, only you may not see it immediately. But the fine line is very easily shattered, especially these days when children are aware of how much of a legal hold they have over adults. In other words, they can do things to you that you can't do to them, and they are very aware of this.
So my method of dealing with children is to be an adult who requires their respect, and I communicate this tacitly via a certain attitude. And my attitude is either one of indifference to their presence or a subtle kind of "don't fuck with me."
This is something I had to learn. When you're entering adulthood your relationship with the whole childhood thing has to change. At first (late teens) I thought I could still be friends with children, but I eventually realized my mistake.
As for my take on whether or not to say "hi" to children on the street, given your example I would simply say "hi" back or maybe a quick "Hi, how are you?" and keep walking. I might also smile and nod. In other words, I'm not going to be an ass and ignore the child, but I'm also not going to pretend to be their buddy. Nor am I going to be the one to initially say "hi."