Indoor vs outdoor fire safety training for kids
Whilst learning how to be proficient with a fire extinguisher is a good thing doing it inside in a fireplace is pretty foolhardy thing to do. There is danger of the fire bursting out of the fireplace, getting icky chemicals all over the place and the flat out mess of it all. 

My suggestion regarding the fire place is to teach your youngsters the proper care, usage and cautions of using the fire place in the correct and safe way. 

For the basic fire safety training (including use of the fire extinguisher) I think you should check with your local fire department or community fire safety officials to see if they offer anything in the way of training, classes or workshops. If you attended these with your youngsters and participated the same as they would it would likely have a more lasting impression on them than something ad hoc that you could fire up in your back yard.