I don't think we can kill the Goblin children because they're GOBLINS. I think we can kill them because they're clearly already dangerous sociopathic killers themselves (or are just a tiny step away from being so), and represent a clear threat to the lives of the peaceable citizens of the land.
Well, what is killing the refugees supposed to represent then? Refugees who are for the most part normal folk shunned and persecuted because of their race and looks.
I think trying to assign a moral reasoning to what appears to be a commercial decision (avoiding potential censorship issues in some countries) is not going to work. Not in a game where the developers actively advertised for players to try the evil path.
In my personal opinion: just don't throw kids in the middle of combat in games, like with the goblins at the fortress. Then the player won't be put into a situation where they are supposed to justify why it's seemingly ok - from the game's point of view, not the player's - to kill one group of kids and not the other.