It's a great little engine, it's hard to beat those b&s flatheads though, mine simply refuses to die. It doesn't look like it would start but it starts 1st or 2nd pull.
I would run a clutch on that kart over a torque converter. You should also weigh out the differences and decide if you want a live axle or a dead axle. Another option that would benefit you the most would be a differential, however I'm not sure on the pricing potentially more expensive.
Brakes, what were your plans? How much potential power do you eventually think you're going to make? a 5hp flathead and 212cc predator can be built up to 50+hp. Obviously you aren't likely to do that but if you do plan to build it up when your kids get older hydraulic brakes would be nice and you could lock them up and do some drifting

, but if you are planning to leave it mostly stock band brakes or a similar set up should work.