Hey Paul,
I'm going through the same questions for first bikes for my Son (5) and my Nephew (9).. Left it too long to go the PW50 and PW80 route as I had originally planned - they're just too tall for them now..
My Son is the perfect size for TTR50-CRF50 etc., but I know that his favourite of all the bikes he sat on was the DR-Z70. So I'll probably get him that.
For the 9 year old Nephew's first bike, I had wondered about the TTR110 (but I didn't want an auto clutch for him) or the TTR125 (I think too tall, but nice to have with electric start)..
Currently I'm leaning towards the JR80 also..
Another option is the Kawasaki KLX110 - 680mm seat height and auto clutch. It also comes in a big wheel version (730mm seat height and manual clutch). I have heard that you can buy a kit from Kawasaki to convert the KLX110 from auto clutch to manual clutch when they're ready to step up. And it's a nice looking bike!
But I am still leaning towards the JR80 - it's got the right seat height, manual clutch that I want for my nephew, it's a two stroke (need I say more?), and it's also about $1000 cheaper than the KLX110 and and $2000 cheaper than the TTR125!!