It would be disturbing and gravely morally wrong, if true; but it turns out that the document is question directly contradicted the policy put forth by Pius XII just a month before, and was probably a forgery. I'm pasting in an except here, but more adequate reporage can be found at insidethevatican.com
--On December 28, 2004, Italian historian Alberto Melloni published a 1946 document, in the Milan daily "Corriere della Sera," alleging that Pius XII had blocked the re-unification of Jewish children rescued by the Church during the Holocaust, with their surviving families, after the War. Melloni claimed that Pius's papal nuncio in France at the time, Angelo Roncalli (the future Pope John XXIII) ignored the papal directive and helped place the Jewish children back with their families.
--On January 11, Italian journalist Andrea Tornielli and historian Matteo Luigi Napolitano published a devastating expose of Melloni's claims, in the more responsible Italian paper, "Il Giornale." They revealed that the October, 1946 document Melloni was presenting as a papal document, ordering French officials not to hand over Jewish children to their families, was not, in fact a papal letter, but an unsigned, mistranslated French memo, written by an unknown French official, misrepresenting an authentic directive of Pius XII, written one month earlier, clearly directing Church officials to return Jewish children to their relatives. The original documents, as well as supplementary material, have now been posted on Napolitano's website (http://www.vaticanfiles.net).
--In the new January-Febuary 2005 edition of "Inside the Vatican," just out, papal experts William Doino Jr and Professor Ronald Rychlak, following the revelations of Tornielli and Napolitano, update and recount the whole affair, demonstrating how the latest allegations, repeated by a prejudiced and uninformed media, constitute yet "another anti-papal hoax." The two authors reveal the truth about the Vatican's directives, showing how hard Pius XII worked, in unison with Roncalli, to save persecuted Jewish children during the Holocaust, and then to re-unite them with their families, after the War. In the same issue, Mary Jo Anderson, a well-known Catholic author, castigates the anti-papal polemicists for repeating allegations about Pius XII before examining all the facts.
--On January 27, the influential website newsmax.com published an explosive article entitled, "NY Times Wrong: Pius XII Saved Jews," assailing "The New York Times" for publishing a story, on January 9th ("Saving Jewish Children, But at What Cost?"], which repeated Melloni's charges, even as evidence was just then emerging which would completely discredit them. The highly-documented newsmax article proved that "The New York Times" piece did not even meet the minimum standards of responsible journalism, and called for the firing of the editors and writers involved in "The Times'" bogus story.
--In its new issue, dated February 5, 2005, the Vatican-approved Jesuit fortnightly, "La Civilta Cattolica," has published an authoritative article, entitled, "La vicenda dei bambini ebrei salvati dall'Olocausto" [The Case of the Jewish Children Saved from the Holocaust] demolishing the allegations of Melloni, and confirming the research of Tornielli, Napolitano, Doino and Rychlak.
--An American organization called the Catholic League for Religious and Civil Rights (http://www.catholicleague.com) has published three major news releases -- on January 14, 18 and 27 -- refuting every aspect of the anti-papal campaign, and detailing the actual record of Pius XII, including new details (first aired by the Italian weekly "Avvenire"), about Hitler's plot to kidnap Pius XII, because of the pontiff's fierce opposition to Nazi ideology, and because Pius was considered a 'friend of the Jews' by the Third Reich."
Works for me. As I said, the catholic church these days I think is a force for good.