Olly is not a child. He is a sworn man of the Night's Watch. Killed Wildlings in the attack on Castle Black, and murdered his Lord Commander.
I would have preferred Jon spare Olly. I think it was designed to make people wounder if Jon is the Jon of five seasons past or if this is a new darker Jon.
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Arthur Dayne is a second to none, once in a lifetime fighter. He is doing what nobody else can do and it makes him a legendary figure because of it. If they had tons of people fighting like Dayne did, one could complain a bit. However, this ability is what makes him the greatest fighter to perhaps ever live.