Dangerous feature on a new 20" wheel kids bike? EZBuild pedals
I can think of three possible reasons for this design:
First, reduce the number of bikes returned as defective because the crank arm is stripped. While this would most likely be caused by poor assembly technique some stores have a generous return policy so they take them back anyway.
Second, I can think of is there are fewer people that can competently use tools. As the things we buy become more disposable fewer people fix there own things.
Third, most likely reason is lawsuits. If a child is injured because the pedal falls off the suit will be the fault of the person or company with the deepest pockets. So while shipping cost  and packaging do add cost, litigation is a big cost of doing business.
While this design is innovative I would have concerns about an injury if the rubber boot were damaged or became misaligned. I would have thought that rotating the pin 90 degrees would lessen the chance of the pin hitting the ankle bone.