I think you are out of luck, short of removing the airbag itself. IIRC, the control module fires BOTH airbags or neither. It's been a while since I actually saw the operating specs of the part though.
If you remove the passenger airbag, you'll have a permanant airbag light (equivalent to CEL, except it will flash and might disable the driver's as well).
Sounds like the kid has to sit in the back, like it or not. Definitely should not be sitting near the airbag, especially since you have Gen 1 airbags.
Never heard of the government exception. Like I said, disabling one might disable both.
