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Unfortunately, it's a bankable idea. The success of Cena and teenage-girl-friendly Jeff Hardy are the strongest indicators that the youth market might be the way for the E to go. As you've pointed out, Merchandise sales keep the E's profits afloat and whether it be DVDs, foam hands or wrestling figures, the most likely target for this market are kids and smarks.
Now I've said before that Smarks are a finite market. There's only so many DVDs and action figures a smark will buy before either a) their interest simmers or b) they've bought everything. Coupled with the fact that we make up the small minority, then it's not a great demographic to try to appease. Ask ECW.
However, kids will always be around and will always have their parent's disposable income to spend. It would be wise from the E's standpoint to cater their products and their attention towards this area instead because it's a market that cannot become saturated. This is probably one of the reasons that WWE's television is probably as about as child-friendly as it's been for years at the moment. This trend will probably continue.
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