I think that as the DM, you were right to give a warning and then go with your feeling -- but most people here are telling you (and I agree) that your feeling, in this case, was, if not wrong, at least unpopular.
There's a ruling in the Star Wars game about whether or not people take Dark Side points or whatever. It basically boils down to:
0) Was it wrong?
1) Was it intentional?
2) Was it deliberate?
It doesn't matter if the character was wrong, if he THOUGHT he was doing the right thing. And even if the character realized that this was the wrong way to do things, if he was reacting to the stress of the situation, he's not doing deliberate and calculated evil.
So, was it wrong? You the DM seem to think so, while most of us disagree with you -- if you gave them the power and attitude of demons, it doesn't matter if they look like little kids.
Was it intentional? Yes, probably, although a case could be made that the paladin believed things through logical deduction that later turned out to be wrong -- ie, "These aren't real children." If the paladin thought that they were demons, then even if they WERE little children, he's not evil for killing them. Just tragically mistaken.
Was it deliberate or calculated? We saw the barbarian choose to do subdual damage, but we don't have a running monlogue of the paladin's mindset. He could be thinking, "The barbarian wants to subdue 'em... but NAW, I'm gonna just cleave 'em!" Or he could be thinking, "The barbarian doesn't realize the danger! He doesn't know that they can dominate us! If I warn him, I'll only become more of a target. I have to finish them quickly!" We don't know.
In the absence of proof of deliberation and intention and the murkiness of your absolute system, I'd give pally the benefit of the doubt.
There's a ruling in the Star Wars game about whether or not people take Dark Side points or whatever. It basically boils down to:
0) Was it wrong?
1) Was it intentional?
2) Was it deliberate?
It doesn't matter if the character was wrong, if he THOUGHT he was doing the right thing. And even if the character realized that this was the wrong way to do things, if he was reacting to the stress of the situation, he's not doing deliberate and calculated evil.
So, was it wrong? You the DM seem to think so, while most of us disagree with you -- if you gave them the power and attitude of demons, it doesn't matter if they look like little kids.
Was it intentional? Yes, probably, although a case could be made that the paladin believed things through logical deduction that later turned out to be wrong -- ie, "These aren't real children." If the paladin thought that they were demons, then even if they WERE little children, he's not evil for killing them. Just tragically mistaken.
Was it deliberate or calculated? We saw the barbarian choose to do subdual damage, but we don't have a running monlogue of the paladin's mindset. He could be thinking, "The barbarian wants to subdue 'em... but NAW, I'm gonna just cleave 'em!" Or he could be thinking, "The barbarian doesn't realize the danger! He doesn't know that they can dominate us! If I warn him, I'll only become more of a target. I have to finish them quickly!" We don't know.
In the absence of proof of deliberation and intention and the murkiness of your absolute system, I'd give pally the benefit of the doubt.