if LW did want to establish this cat-based friendship with the neighbor child, would that be a good or bad idea for the child's development?

Probably fine. It's generally good for children to know that you can have friends who are very different from you - being a lot older can be a fairly safe way to be different from a child.

Of course, that doesn't apply if LW is in some way a danger to children, but most people aren't.