I believe the only ones that should be counted, are the adults that contribute to the family, whether by income or 'in kind'.
So a family of 5 which consists of 2 adults and 3 kids, with a family income of $24k,
the cost is $12k per person.
It's definitely tough to come up with a standard when it comes to larger families. I think I agree with you that adults should have a greater allowance than the parents (if you
are going to deviate from the original challenge). That said, if you are going to deviate, I don't think $0 for the kids makes sense, since the kids are obviously going to cause spending to rise. Maybe a % of the adult $10,000? $5,000 per child? $3,000? As a single adult with no children, I wouldn't know where to draw the line.
Also, I think some of us are making the challenge a bit too easy with the $10,000 per person model. If your current spending is $54,000 with 5 people, shaving off $4,000 is great, but not badass enough in my opinion to really qualify for this challenge.