I really think it is an individual thing, and most of how the child will take it depends on how the adults handle it. If the adults act like it is a normal, everyday event and take the time to explain what is happening, I think most children will not be traumatized. In fact, a large percentage will be fascinated and want to play with the parts. Last Saturday I got together with a few friends to do in some excess roosters, and one of the kids was entertaining us by having a dance competition between the headless, featherless carcasses that were waiting to be gutted. It was darn funny, too.There are a few differences between how today's kids view animals and how they did in the "old days." Don't underestimate the psychological pain caused by witnessing slaughter.
There has been a fundamental shift away by science and society from not even thinking animals were sentient beings to anthropomorphism to the extreme. (Anthropomorphism is when you give animals human qualities and traits.) In the "old days," the children would have been exposed to slaughter of chickens since they were babies. That's not the same as exposing a child suddenly to slaughter and death, and it gets really upsetting if it is of a pet. Death is kept far away from our society, hidden away in hospitals. Before antibiotics were discovered in the last century not so long ago, a simple scratch or cut could kill you.
Please, just don't underestimate what is going on in your kids' minds.
OTOH, my mother was raised on backyard chickens and fish and game, and she will not have any part of processing chickens. She does not want me to tell her which bird is which. But she sure loves eating the birds I raise. She brags to her friends about how good they taste.
I think if it is a humane process and the children's feelings are respected, it will be fine for most children. There will be a few who cannot handle it, but that is true for almost everything. There are some children who cannot handle it if their food touches on their plate. There are some who will have a melt down if their daily routine is disrupted. Childhood is full of little traumas that teach us how to deal with the big traumas.