I'm pretty sick of government sticking its collective nose into our grocery baskets, frankly. Some of the favorite children's cereal, mascots and all, are some of the healthiest cereals... Cheerios, Rice Crispies, Capt Crunch, min-shredded wheats. The government needs to butt the hell out.
That said, my children were never allowed to choose their own cereal. I gave them a list of cereals that had my approval (based on nutritional value and low sugar content), and the child who went shopping with me that week (we had 5 kids, each week one of them grocery-shopped with me and had the responsibility of planning one meal for the next week) got to choose the cereal for the week. Worked wonders, and none of my kids had a weight problem. Well, not until they grew up, had kids of their own and discovered the joy of their own middle-age spread!