I've been thinking about this a lot lately as well. All I'd need is a way to explicity tag certain games as 'kid-friendly', and that'd be that. I don't want my kid to have to go through an endless sea of games, clicking around haphazardly at what looks cool only to be denied. I'd rather he had access to a personal collection of select games - for instance, he loves the Donkey Kong Country series. Kirby too. So those would be visible to him. Meanwhile GTA would NOT be, because I haven't actively approved it. Neither would a game like SotN - not necessarily because it would be inappropriate, but because he hasn't been introduced to it yet and doesn't need to be overwhelmed. This way I can expand his selection of games at a manageable rate, while he can focus on what he loves.
And yes, most likely a password system with which to access the 'true collection' would be optimal.