They still killed children. Given the way Blackwall laments the situation he didn't order them to do it. So not only is their defence "Just following orders" which is, y'know, not even remotely exculpatory, but it also involved a murder judgement call on their part. I just see them as equally culpable at least, and likely moreso.
If you talk to him in prison, Blackwall absolutely knew there were children there. He realized it moments before the soldiers attacked. He hesitated. He knew there were children in the carriage, but wars are about heredity and bloodlines, and as ugly as it was, that was the way wars were fought. And then it was over. Later, he regretted what he had done, but it was already too late.
And he was right about that. In one of your earliest conversations with Cassandra, you can ask her why she was raised by her uncle instead of her parents and she'll tell you that her parents were executed because they were part of a plot to overthrow King Markus. She and her brother were spared because they were family and because they were very young, and it's implied that this was an unusual concession. In other words, killing off rivals and their families was not really all that unusual. Maybe if Cassandra had not been King Markus's cousin, she and her brother would have been executed.
I always free him to atone under his own identity and of his own volition. The Colliers are dead and Blackwall's execution will not bring them back. Justice demands a life, and justice was satisfied, as far as I'm concerned, because Ranier's life did end. He himself made every moment after that his penitence. In my mind, allowing him to continue to atone voluntarily is the one good thing that can come out of a terrible situation.
But I'd given this some thought prior to meeting Blackwall in game. I wrote a character who had formerly served Arl Howe, and I'd decided that if he had been ordered to attack the Couslands, he would have done it, and he would even have killed little Oren, if his orders demanded it. So, after deciding whether I could forgive this character, forgiving Blackwall wasn't all that tough.