I've seen a lot of kids compete in pankration matches. Some are very technical and it is conducted in a very friendly atmosphere. It seemed like the kids really enjoyed it. That's a little different than MMA for a few reasons:
1. There isn't as much of the TapOut/Affliction/Nap, Tap or Snap/Kobra Kai macho bullshit that's been more and more popular in MMA.
2. Because of the lack of head contact, it seems like more of a legitemate sport than MMA and the possible concerns with developmental problems are taken away. Also, a lot of kids freak out when they are hit in the face. Having said that, I've seen some very nice, well adjusted kids who learned to box young, but they wear the bigger gloves.
3. The refs err on the side of safety. They call the match when a lock reaches nearly full extension rather than tap, etc. It shouldn't be a bloodsport at such a young age, and an audience who wants to see that is deranged.
Can things like this lead to messed up kids? Yeah, so can any contact sports mixed with messed up parents. With the correct environment and parenting, I think fight sports can be very good for children. They just need to learn that it's a sport, not an actual fight, and its not acceptable to use the skills you develop to bully others.