I see no harm in having three sessions. Having one for the young kids sounds like a good idea - maybe I could just show them how to make, say, a chibi-fied head or something instead of a complete body. It'll be a lot easier for them to grasp, and they'll have something that they can finish in the alotted time, since I doubt most of the kids will want to stay for hours and hours, and they'll want something tangible they can take home and show to their families.
Though I'm actually a bit worried about the fact that the panel is heavily centered around sewing. I've had some experience working with classes of kids in the age range in question, and I'm not sure children at the lower end of that spectrum will have the attention span or fine-motor skills to do down-and-dirty sewing, since it's meticulous work. Most of the time would probably be spent helping with threading needles and getting everyone up to speed, and I'd put money down on the fact that sooner or later someone would stab themselves with a needle, ruining everyone's day. Having safe tools is good, but you can't cut out all the sharp objects. While this sounds like a good idea, I think we'll need to use extreme caution and think outside the box if it's to go smoothly and retain an anime focus. With kids, there's a lot of potential for disaster.
Maybe what we can do is put together some pre-constructed heads for them, one for each child or parent/child team, each maybe about the size of a softball. (I'd say to go bigger, but then the cost of materials would skyrocket.) Then the kids could spend the panel making the hair, face and accessories. I think that'd be a good idea, since it takes the ugly grunt work out of it and lets them get straight to the fun part. Plus, there will be more of an emphasis on glue rather than needle & thread, so they'll be safer and more comfortable. What do you think of this idea? Maybe we can toss it back and forth a few times and get something figured out.
On the topic of time...I think 2 hours for each session is good. 3 is a bit too much, since the "classes" are usually pretty autonomous, and 1 isn't enough time. My only request is that they're not held during the opening or closing hours of Artists' Alley, since (the rest of you might be happy to hear this) I MAY be having a table there, with a selection of dolls for sale. Nothing's finalized yet, but if I do have a table, I want to make sure I'm there to start it up and shut it down each day.