The creator of a painting has the natural right to destroy it. The creation belongs to the creator, by definition. Analogously, the Creator of life has the right to take life away.
Keep in mind though that, although God has the right to destroy His Creation, he does not destroy human beings. In fact, he is merciful to us, in that when our earthly life is ended we have the opportunity to live with Him forever in eternal bliss. God also honors the choice of people who choose not to live with Him forever. Therefore, it's possible that many of the Canaanite children that were killed went on to a greater life.
We're talking about moral aboslutes here, and the fact remains that you're arguing that it is sometimes moral to kill children. That's an instance of situational ethics rather than moral absolutes...