That's pretty damn simple actually. With XBMC you can set a favorite to just about any hotspot or menu. Most of the themes you can download (AEON MQ2 is what I use) also let you completely customize the main screen. So you would go to video files enable library mode go to the Genre "Kids" or whatever and add that as a favorite. Then create a hotspot on the main screen and label it "Kids" you connect that hotspot to the favorite you created earlier and boom. You have your kids library and you have your Movies library even though they are in the same directory. Plus you can lock a view on the new hot spot you created... want coverflow on the Kids hotspot but not Movies?.... No problem XBMC will save each view.
So setting this up the way you said was a lot easier than I thought it was going to be. I actually installed Aeon MQ3, and like it (A LOT!) and almost have it set up exactly the way I want.
I say "almost" because I apparently have a broken favorite and no real clue as to how to fix it.
I set a favorite to my two sources:
Kids: K:\Kids
Movies: M:\Movies and K:\Movies
I also have a favorite set to video add ons.
When I put all of these favorites in a custom menu on MQ3 (or MQ2, or Transparency, or any other skin I can customize the menu), Movies and Video Add-Ons work perfectly fine. When I go to Kids, it is like it is trying to find a playlist (blank playlist at that) rather than the favorite.
I have no clue how to fix it, but I do have a post in the XBMC forums help section. I don't suppose you have any clue?