And remember that, if a child grows 8 inches, you're not going to have to let the kilt down 8" - not only is height growth distributed (obviously....) but kids in the 10-12 range tend to be leggy, so additional height is commonly less in the legs than elsewhere. So, a ginormous hem really isn't necessary for most kids.

I typically look at the tartan and pick a dark stripe somewhere between 2 and 4" from the selvedge (depending on how tall the child currently is) and fold the hem there. If you can avoid it, don't fold in the white - if the bottom of the kilt gets even a little bit grimy, you'll have an obvious line when you let down the kilt. You'll likely have to use a white area in the future when you let down the kilt, but at least you won't start out there.

Also, remember that the fell is stitched in proportion to the overall length of the kilt. So, if you let a kilt down a huge amount, the fell will be proportionately much too short. The kilt will be "flippy" rather than swingy, because the fell isn't long enough to control the pleat swing.