use of theatrical makeup for child actors in a play?

I don't think it would be an issue of offense or not offense. After all, anytime a theatre does The Mikado or Madame Butterfly, they have to deal with portraying Asians without always having Asians. I do think it would be more trouble than it's worth. Since the play is based on a Japanese legend, go with a more stylized approach. I like the masks idea. You could also use stylized makeup to suggest character rather than realistic ethnic makeup. That will be more fun for the actors and actresses anyway.

I think you're on the right track. Politically, it's considered "offensive" to have actors of one ethnic group in makeup to portray people of another ethnic group, unless the character is using it as a dramatic disguise.

Let the play itself inform the actors and the audience. Leave the special makeup to Rick Baker.

Good luck with your play!

Use the make-up. Let them learn now to "look the part".