Wow, ok, these settings are way more complex than I had expected. I appreciate the power and granularity, but I can't help feeling there might be a more user friendly UI.
So previously, I'd set up my daughters iPad with the following settings to get over the issue I had been having.
It hadn't even occurred to me that even after setting up a collection that you might then have to separately make that collection visible to clients generally.
But now I've done the global setting that forces the kids collection to be visible for all clients, yes, it has replaced the default 'kids' collection as you suggested.
Edit:
I suppose I find it a bit convoluted that setting up a collection requires so many steps. Shouldn't the assumption be that the collection is visible to all clients unless told not to be, either explicitly or via turning on of kids mode? It just feels like there is at least one more step here than there might be and discoverability is low.
Saying all that, I'm really impressed by how much control and complexity there is here in fine tuning settings per device. I'd just like to think there might be a more user friendly way of exposing all this functionality.