I have no problem with wiping out the goblin camp. I don't need to believe that they are metaphysically evil to do that. They attacked us, and they are killing and eating people. Its us or them. I would hesitate to kill a helpless goblin child, but the goblin children that we are discussing in this thread are actually aggressors. Although... I think it would be interesting to give an option to knock them out, and then be forced to decide how to deal with them after the entire camp is dead. I doubt you'll find any adoptive parents, and you probably don't want to take them with you... Is killing them in cold blood better than letting them starve? Let the player decide.
In any case, I do agree that the ability to kill should be symmetric. Nobody non-essential to the plot should be invulnerable, and the number of essential people should be kept to a minimum.