1) Spirits have children. Koh is the son of the Mother of Faces.In order:
1) Having children? In the Avatar-verse? I'd give even or better odds they just think they're some kind of spirit. It was only because the Lion Turtle said its kind were some of the first that we even know they are biological. Even that is suspect given the distance it covered in a single night.
2) I did not say energy bending. I said bending removal. As canon shows, that knowledge is quite clearly dangerous, even if the method is different.
3) How do we know it looks like a Lion Turtle? I mean really, the author has given us no info on that front. Small Moose-Lions don't really look like adults either. Or, for that matter, they could just think the Lion Turtle 'spirits' are based on another actual creature. Only bigger. Like the Moon and Ocean 'koi'. Let's not make any assumptions shall we?
In any case, its clear you aren't really thinking about my points, so I'm just going to shut up and wait for clarification from the author. The only one who's opinion matters.
2) It's only really dangerous when it's A) being used as the spear-head of a political revolution, and B) the Avatar isn't able to fix it. What's more, they had no reason to believe anyone else could learn to use it. Only two people knew how after all, Aang and that Lion Turtle.
3) We know it looks like one because they were able to tell it's one. Not all animals look like a small version of themselves when they are kids, but some do. They could just be assuming, it could be something else, but the two kids think it's a lion turtle, and unless they happen to know what a young lion turtle looks like, it's reasonable to assume that it looks like a small lion turtle.