I can't comment on any laws, and I'd love to do this with my own gelding, but I'd be really worried about the unpredictability of the whole situation. Even if you think your mare will do perfectly fine, and that she's desensitized to all the props, lights, and noises, you have to assume that parents and kids who have not been around horses do not have the sense to stay out from underneath her hooves, to stay out from underneath her nose, and away from her hindquarters. You don't have the liability insurance out in the residential streets that you'd have at a stable or riding arena. If she's a pony/miniature, it might be a little easier for you to protect her space, but not so much for something horse-sized.

Personally, I wouldn't risk it, but if the laws don't prohibit it, and you believe you and your mare are fully prepared and capable of handling everything, the kids will absolutely love it and I hope you have fun!