I will agree that the intelligence taking the form of a child had significant impact... just not for any good reasons. It would had been better had it been the form of a reaper, imo.
Personally I would trust a reaper hologram MORE than the starbrat... the starbrat being the same kid haunting Shepard's dreams is the kind of stuff that makes you doubt yourself and get confused. I'd even go as far to say that the starbrat being the kid from Shepard's dream is one of the bigger points that lead people into believing the Indoctrination Theory. The fact that Shepard doesn't even bat an eyelash to this makes the situation all the more confusing. We didn't even get a cliche "I took a form that your mind could comprehend" line. We get ZERO justification as to why the catalyst is the same kid haunting Shepard's dreams. Is this a dream too? Is Shepard indoctrinated? Are they in his head? Why does it talk with the voice of male and female Shepard? What the hell is going on?
I'd say that confusing Shepard is exactly what it tried to achieve. Think of it, Shepard came there to destroy the Reapers, that was his goal. If Harbinger appears next to him Arrival-style and tries to convince him that there is another option it won't work. That's why it tries to confuse Shepard, sway his mind away from the initial goal.
I meant Shepard has no reaction to the Catalyst appearing as the kid. If it was the kid you think Shepard would say something or give some sort of acknowledgement.
I think the scene flows quite naturally.
"What? Where am I?" - confusion about the place and events
"The Citadel. It's my home"
"Who're you?" - natural question
"I'm the Catalyst"
"I thought the Citadel was the Catalyst" - both confusion about child's appearance and the revelation that Citadel is not the Catalyst.
"No. The Citadel is part of me" - which is confusing, to be honest, since it kinda contradicts its previous "It's my home" statement
"I need to stop the Reapers. Do you know how I can do that?" - Shepard realizes that this is going nowhere. He doesn't know about the connection between the Reapers and the Catalyst, for all he knows, the Catalyst is the final ingredient for the Crucible - a device meant to destroy the Reapers. He perceives the Catalyst as an equivalent to Vendetta.
I just don't see where can a line about child's appearance fit. IMO asking something like "Are you that kid from Vancouver?" is close to "I thought the asari needed other species to reproduce"