My boys are 8 (nearly 9) and 10. They've been around bonfires since a young age and know very well what they may or may not do. I often have a small fire for them on a Friday or Saturday night....and yes, I do leave them outside with it (checking on them every so often). They cook hotdogs on sticks and make s'mores. The same things I did when I was a child with very minimal supervision.
But they were raised this way and understand the rules. I'd never allow someone else' children to come into our yard to do this with my kids.
The rules are:
1. No running or wrestling.
2. The fire stays in the fire pit, not on cool torches carried around.
3. No burning anything that isn't wood or paper.
4. Absolutely no fireworks!
5. No ball games (baseball, soccer, football).
I've NEVER had a problem.
Here's the deal...if we raise our kids to be incapable of responsible behavior, we will have adults who are morons that are incapable of responsibility. Raising them and giving them wings to fly often means that we must allow them to be in some kind of danger. We do it from the moment they start walking (really! Why the heck do all those tables have sharp corners...to scare the snot out of us?!). So teach your children...and let dad teach too.
ETA: And regardless the decision on the fire situation....unsupervised fireworks is absolutely a *NO!* A friend of mine almost lost an eye when the LEFTOVERS from a firework were thrown into a fire and exploded.