When my son was about 4 and loved to help me in the kitchen, I bought him a 6" chef's knife - a real knife, really sharp - and then we talked about safety and supervision. Then we got out a cutting board and a carrot: one for him and one for me. I showed him technique, then stood behind him and guided his hand so he could do the work himself the first few times.
He did great, there were no problems at all. He certainly had respect for the knife, but he also had pride that I trusted him with such an important and dangerous tool, self confidence that he could handle said tool, and responsibility to only use it when he was helping mommy (a good respect for the rules doesn't hurt either).
Long story short: this child is now 29 and a trauma nurse in the emergency room of a level 1 trauma center. He's an amazing cook, too, better than his fiancee, who reveres Alton Brown and competes with his younger brother (also an excellent chef) for the best dry rub.
Both my daughters also cook :)