Sorry if this is thread necromancy but I've just started running CoS so I'm hoovering up any and all good ideas for tweaks and edits. Saw this thread and thought I'd chime in, for what it's worth...
Obviousily, the cardinal rule is "know your group".
My two cents worth on the OP's ideas and what I am doing for my group:
1) the Vistani - racial/cultural representation is too big an issue for me to fix. But we all need to do our part otherwise it will never get better...
The vistani are stereotypes and there is a tendency in RPG design to take these stereotypes and run with them to the extreme - The same can be true of any fantasy culture which is a direct representation of an existing culture, or even a clumsy metaphor for one (e.g. the entirety of "oriental adventures", Tolkien's races being analogous to human cultures/races, or pretty much all of "medieval fantasy" being a tiny chunk of 14th century europe with added magic)
Making the Vistani more like wiccans is an approach that could work... but then you risk offending wiccans or, maybe worse, making them into a different stereotype. But if it works for you and your group, go for it!
For MY players, I have emphasised that they are an imaginary people, based on a romanticized fiction of a collection of stereotypes which were themselves based on romanticized fiction.
I have then gone on to stress that the Vistani are simply a culture with the full gamut of good and bad people like any other culture. Some of them serve Strahd willingly, some serve out of fear, most are just trying to get by and feed their families while upholding their way of life, and some actively oppose (or try to "cure") him.
People are people. Some people are from cultures that we don't fully understand, or have aspects that we find distasteful to our own cultural sensibilities. Welcome to Earth.
(The travelling community here in Ireland, having cultural similarities to the Roma, suffer much of the same prejudices that the Vistani do, and the walls of division are built on very deep foundatins of mistrust, on both sides - one of my players is active in the area of trying to bring education and social equality to the travelling community in rural areas, so I had to tread carefully with any parallells and am regularly informed if I overstep)
2) dead children - My group would be pretty grossed out if children were killed "on screen" but they're ok with the implication that it has happened or that it will happen if they don't take action. Many groups would not be so blasé about it.
Here are a couple of ideas to change whatever you gotta change to make it work:
Re child ghosts - probably not too bad as long as there aren't child corpses. Creepy child ghosts are a staple of horror after all. Just gloss over the specifics of their demise and go for creepy rather than anguished.
Re the Dream Pastries - I think the thing here is less the dead kids and more the corruption of the adults to the point that they are "willing" to hand over their kids. You could have some kind of "changeling ritual" where the "donated" children are cursed to turn into hags on their 13th birthday, just like a hag's child would. And then drop them at an orphanage or at a random farmhouse. (just ignore the whole "Hags eat children" thing)
3) the dusk elves - in my game the dusk elves know they are doomed and are just going through the motions of life because they know on some level that their souls will be trapped in Barovia for eternity regardless.
Kasimir is trying to bring back his sister because of guilt. He wants to save her from torment. That's it. Nothing incestuous, no pimping her out to repopulate. He's not really stable and isn't thinking much beyond that. To be honest, nor had I until now.
Thinking about it now, here are a couple of ideas:
The humans aren't willing to procreate with the dusk elves, even if the elves were willing to, because they know Strahd did this to them and wants the elves to live with their doom. And even if they did, the dusk elves would still be "no more" because their elven blood would be diluted by human blood. (Elven pride/arrogance/superiority is a major part of their cultural personality in my game)
There isn't a solution to their problem except maybe freeing them all from Barovia and finding them some other elven community to live in, out in the world.
That's just how I'm approaching things, and a couple of ideas off the top of my head. Hope it's of some help to someone ;-)