Well the screen needs power, a
VGA input, and a USB output for the touch to work.
And you have 7" x 4" to work with? That is plenty of room for a 7" monitor.
I think having a screen just lying around looks sort of stupid. And with kids, you know there will be some nice tug of wars going on with your fancy pants expensive screen.
As for the lilliput vs. xenarc, there are whole threads devoted to that.
In recent times though, they are exactly the same. They used to use used panels (wow that is alot of "used") but now they are new hitachi panels. Insides look just like the xenarc. Screen quality is the same. Build quality is the same. Now if you go for a 3 yr old comparison, then xenarc wins, but I dont think that is the case anymore.
The real question today is "transflective or not?".