I confess that initially I thought that this wasn’t a mimetype issue, that we were talking about two different resources – the set of children and the set of descendants. But what is proposed here is far more elegant, and is nicely cast as a mime-type choice. The key is that the link relation “down” only ever returns a child (as application/atom+xml;type=entry) or a feed containing _only children_ (as application/atom+xml;type=feed) – what differs is the representation format of that child (expanded or not).
Actually, atom-hierarchy-02 allows link@rel=down with other non-Atom @type values too. Not only that, presently a combination of @type values can be used in a single entry with link@rel=down, including Atom content type.
Is that overly flexible? That is the currently open question.