Legal Question in Intellectual Property in California

I would say coomercializing the children's singing of adaped songs would result in two sets of problems. The first with the copyright holders of the songs; the second with the childrens' parents over commercialization of their performance. Although you might get away with doing a recording with altered lyrics, especially if the commercilaization were small-scale and local, it's still risky. There are fair use and parody exceptions to the copyright laws, but both are easily overstepped. I'd recommend proceeding only with direct advice from copyright counsel.