I think it's important to remember that this isn't YouTube's fault- this is the last thing they'd want to do- it is the fault of the outdated law. It's long overdue an update. Also, a quick hint- I found that after my video was flagged as Made for Kids by YouTube sticking a little disclaimer in the description makes it go away: my disclaimer went something like this:
"NOTICE: IN COMPLIANCE WITH YOUTUBE'S NEW POLICY, THIS VIDEO IS NOT MADE FOR KIDS."