Umm, I don't know where you're getting your translations from, but it's clearly meant to be "Fated Children".

http://www.nd.edu/~archives/latin.htm

Search for "liberi" and then "fatali". Although "fatali" may in certain situations refer explicitly to death, it is generally used for fate and destiny as general concepts. "Fatum" does mean fate, but "fatali" works too. Besides this dictionary demonstrating it, the Wikipedia article confirms it:

http://en.wikipedia.org/wiki/Liberi_Fatali

Finally, "Deadly Children" would hardly make much sense amd just sounds dumb. What are they, some deadly assasination squad made up of 8 year olds or something? "Fated children" on the other hand makes perfect sense, seeing as fate is one of the pervading themes of the game.

In conclusion, it clearly means "fated children/children of fate".