I haven't replaced any children, but I have edited them in CAS, so I can understand why you do. My main sim couple adopted their baby, and once she became a toddler, I aged her up in CAS and made a few little tweaks before ageing her down again. This wasn't just to ensure she looked cute, but also to ensure she looked how I envisioned her in my head, e.g. blonde hair, blue eyes, freckles etc. and was now my own 'creation'. I often have a picture in my head of how my characters/sims look, so I will edit them if needed to get as close to that picture as possible.
I have another couple that I plan to have a daughter. It will be interesting to see how their genetics mix and come into play. They're both very beautiful, so their children should be beautiful too, but I'm not sure how true that is in The Sims world. I wouldn't replace her if she wasn't, but I might give the birth a few tries before saving until I'm happy with her. I wouldn't want to edit her face as I want her to look like her parents, but I might then change her body shape, hair and eye colour if needed (these would all still match one parent though). I later plan for her to have a son and want him to strongly resemble his grandfather, as this is a important part of the story. Therefore I might clone the grandfather if needed/the genetics aren't right and make the clone the father - I know that's pretty messed up, but if I do this I will delete the clone once the baby is born and make his father in CAS - perhaps using play with genetics first, then editing as needed. Something else I sometimes do, if I'm happy to skip the baby stage, is use play with genetics and give my couples children/toddlers in CAS. I hope in the future we will be able to create babies in this way too.