Personally, I don't mind small outbursts from small children at movies that are geared towards them. But I'm talking like momentary reactions that are obviously what the movie is aiming for (gasping when something startling happens, laughing at jokes, etc.).
With little kids, you sometimes get a little bit more of a reaction than what you'd get from an adult, but if it's brief and caused by something that happened in the movie, I tend not to mind it. Sometimes, it makes the movie even more awesome.
One example is when my husband and I went to see Brave. There's a scene where a whole group of men get down from a castle roof after being locked up there by taking off their kilts to make a rope ladder. So once they get down, there's a shot of them all walking back inside with nothing covering their backsides. One little boy exclaimed quite loudly that "their butts are naked!" or something similar, because he thought it was the most hilarious thing he had ever seen. It was honestly funnier than the movie scene itself.
Or when we went to see Tangled, there was a small group of girls that were just totally, totally in love with Flynn Rider, and had a vocal but not unexpected reaction to the scene where he and Rapunzel are in the boat with all the lights floating around. It was adorable.
Children who are upset should definitely be taken out of the theater, for their own sake as much as for everyone else's. Children who can't stay in their seats don't need to be watching movies until they are able to sit still. Children who are being noisy because they aren't paying attention also don't need to be in the theater. But I do give children who are momentarily loud because they are watching and enjoying the movie a definite pass. If they quiet down (especially if their parents encourage them to quiet down) and are otherwise well-behaved, I'm cool with that.That
is what should be expected when you watch a children's movie. Not total chaos caused by children who are too young or too disinterested to pay attention and/or enjoy the movie.