http://usmilitary.about.com/cs/generalinfo/a/salute.htm
I don't know about Britain or anywhere else, but in the US the military is considered to be subservient to civilian control. No civilian is ever expected to salute someone in uniform. On the other hand, like the police or anyone else in uniform, members of the military do tend to think of themselves as a private club, and military procedures initiated by civilians are not appreciated, and in fact privately joked about. I would recommend not doing it.
As for a little kid saluting you, that's an honor and a delight to be treasured, so of course it would be returned. Kids don't know any better, and it's cool.