It takes all sorts (I am trying to avoid mentioning horses)
And I completely accept housemum's "it's only a bit of fun" theory, and that it's worked well for them.
But I would never do this with my daughters. I think little children understand far more than they can express, and however tactfully and obliquely expressed by a casting person, and however cheerfully handled by me, I bet dd1 at least would pick up the gist of what was going on.
The thought of her understanding that she was being rejected because of her looks absolutely chills me.
Perhaps I'm extra sensitive because in fact dd1 has eczema and often the skin around her mouth is inflamed and ay those times a moggeling-casting-type person wouldn't even look at her. But she's a beautiful little girl with loads of self-confidence and I will personally thump the first person who causes her to worry about what she looks like.