Toilets - a popular topic for narrowboat dwellers, google some of the articles from the boat magazines. We originally had a cassette toilet and changed it for a pump out.
If you don't like the idea of having a 'whole tank of poo under the bed' then think about how much you will like hauling a heavy tank of poo and wee off the boat on a regular basis, up the muddy tow path and into a sanitary station to empty it bit by bit, then back down again. How about doing that with a couple of kids in tow, who want to wander down to the edge, play with passing dogs or just generally tantrum because there is no TV signal and they can't watch Cbeebies?
I wouldn't worry about the kids falling in the water, if they do they will be out in seconds. Worry about them dropping their (or more often their sibling's) mobile phone / DS / camera in the canal!
It is a much more basic life, if you want to run a fridge freezer, washing machine, etc, you are best off in a long term mooring where you can hook up to electricity. If not, you will constantly be charging / nursing batteries. Again if you are handy with wiring, then this could be fun and part of the charm. If not, then get out the cheque book. Even then the voltage is limited - hairdryers and toasters are pretty much out but toasting on the fire can be lovely.
I think the decider for me to sell the boat was the lack of privacy. I know this sounds mad to people who haven't done it but if you are sitting outside on a canal, people talk to you. And there are always people passing by - day or night, canals are great places to walk your dog, cycle or simply get from A to B on a flat path. I imagined the solitude of nature but instead was endlessly asked about what I was crocheting, which way the shop was and told "This is the life isn't it". Sorry I sound such a grump. I grew up around canals and always wanted a boat but would urge caution.
Running away on a boat is not a solution to a mid-life crisis either, but that is a whole other thread!