At OP, I don't know who that is supposed to be. I think that is just a picture some fan has drawn. So I guess it is just some random Uchiha child.
Because the chiildren wouldn't think something was up if they only killed adults. The would have eventually revolted when they became older, killing everyone was the only way. He would also leave them all parentless, causing them huge amounts of emotional pain, which we know in the Uchiha turns to hate. This hate would have led to another coup and would have led to a war, that this time Itachi wouldn't be able to stop (since he would already be exiled). He killed them all to save the city from a civil war that would have likely led to others attacking Konoha to gain power and would have led to the 4 great ninja world war. By killing his own clan he is stopping any chance the Uchiha have to start a coup and lead to a war. The one mistake was obviously leaving Sasuke alive who was seemingly determined to destroy Konoha, but if things had gone to plan Sasuke would have killed Itachi and gone back to Konoha a hero.
Yes it is sad and horrible that Itachi had to kill people which included children, but the amount of men, women, and children who were overall saved because of him. He sacrificed his image so no one else had to bear the burden of killing anyone, and was made to look like a villain to the entire world. Self sacrifice and aiding the entire world, sounds pretty heroic to me.
Don't get me wrong I don't advocate the killing of children or anyone, but if something absolutely must be done and needs to be done about something and the only option is murder, then it has to be done for the greater good of the world. Itachi is a hero of the ninja world, and is definitely a hero in my eyes.
Edit: Also clearly he wasn't going to kill Sasuke, whom he loved more than anything in the world, and like I said above he had a plan for Sasuke, but Sasuke didn't follow that plan.