Everyone can decide for themselves what to allow on their own property and how to raise their children and grandchildren, but I think the OP did the right thing from their perspective of avoiding risk. If something doesn't fit the mold of how diving in the area is normally conducted, then it seems reasonable that a shop might avoid getting involved.
As for what to do with one's own children or grandchildren, we can all draw the line in different places. Is a kid on scuba in the shallow end of the pool more likely or less likely to get hurt than kids who in days of yore engaged in rock fights, rode bikes without helmets, didn't wear seatbelts in the car, etc.? Some of these things we did when we were kids are clearly no longer acceptable, but others remain in the discretion of parents. I'm personally not comfortable with the idea of a person who not only doesn't have much current dive experience himself but also doesn't have experience teaching children scuba taking them for a "discover scuba" dive in the pool, but my opinion has no bearing on what others are comfortable with.