Hey,
Don't underestimate the kids now days. I say give them a challenge, most of them will step up to it if you let them.
I agree that there is an art to not letting them get frustratied, but that's what we are for, right?
Of course, my daughter finished 112 in the nation in the Gateway Country Challenge a few years ago when she was seven ( in the 6 to 10 year olds or something like that)
She beat the pants off of the sales people at Gateway
(Midtown Madness on the PC)