Are you sure about restricting your kids use of the computer and letting them use Phex? 
 
I do hope, they are old enough to cope with some of teh crap you can find on the networks (Gnutella isn't quite "childsafe", just like any other p2p network isn't).  
Or do I misjudge the age of your children? 
 
  
But that aside:  
I just tried opening Phex with a restricted User (OSX Tiger 10.4.2), ad it worked qutie well. My setting are:  
Finder & System: 
- NOT the simple finder (Using it with "simple finder" also works)
- Only 2 Programs allowed: Adium (Chat) and Phex
- all other points disallowed.  
Mail and iChat: Nothing allowed. 
Safari: Not configured
Childsafe Dictionary activated.  
Was genau antwortet das system?