I tried to find a drawing for you so that I can explain this a bit better, and I’m sure it’s more than you need to know, but I think a little background is necessary. If you look at this site http://www.synapses.co.uk/science/fluvirus.html down where it says "antigenic shift, you’ll see what the problem is with avian flu.
All true flu viruses are orthomyxoviruses. Birds have their own flu virus-strain, as do most animals. Generally the viruses aren’t contagious to other species. So if you dog gets the flu you can’t catch it. However, both birds and humans (and pigs) have eight discrete “packets” of genetic material and one of these packets can “jump” into another virus causing dramatic genetic changes. These changes can make the virus far more virulent than either of its parents.
Usually the “jump” occurs when humans live in very close quarters with their livestock. This puts both the human and avian virus in close contact allowing them to swap genes. This is why so may flu pandemics originate in Asia, where a high portion of their populace lives with their animals.
What we have now in the US is avian flu. In other words, we have birds with the flu. They are asking that the birds be destroyed to prevent a “jump” in the genetic material. However, the orthomyxovirus strain found in China and that in the US are different strains. So we basically have two different flus in two different populations of birds.
Now that I have totally not answered any of your questions I’ll start.
Bird flu is not transmissible to humans. However as stated above your flu’s genes and theirs can intermingle. That strain, if the genetic material jumps into the human orthomyxovirus could be conferred to humans, and could be deadly.
The disease would probably be more contagious during feeding if you doing that in an confined area, where you are likely to breath in their aerosol… Flu is generally more easily transmitted though aerosol than through bodily fluids. There are only a few ways you can catch a virus through bodily fluid contact. I suggest that you use precautions when slaughtering. Safety glasses, gloves, and a mask, at least during the times when there is contact with blood wouldn’t hurt.
Most viruses can be transmitted before symptoms appear. So yes the bird could have the flu before you knew it was even sick.
Personally, I would keep the birds until I was aware of an outbreak in the area, or was ordered to destroy them, but that’s just me.
As for your children; it would be prudent to keep them away from the bird when they are in confined areas, or during the slaughter. Children are generally more susceptible to new viral strains, but if we get a genetic shift, everyone will be at risk.
Sorry about the length. Hope this helps.