It's hard to give a definitive answer in this case. In general, I would advice against it, for the safety of the children just as much as that of the cat ;)
Physiologically, cats are build in a way that allows them to extend their front legs like shown in the video and hang their entire body wheight from them. But a sudden jerk on their legs might lead to dislodged joints or in extreme cases torn muscles or tendons.
For comparison: children can also extend their hands straight up and hang their entire wheight on one arm. Nevertheless, there are frequent cases of parents unwittingly dislodging their childrens shoulders because they jerked on them too suddenly or the child stumbles while being held by an arm.
The risk of hurting the cat would be even higher if it was grabbed by the paws as many children would probably do, in contrast to very close to the shoulder as shown in the video.
And then there is the risk of the cat not agreeing to participate in this dance and lashing out. Many cats don't like having their feet held because it's not part of their natural interaction and they may feel entrapped or frightened.
Furthermore, cats retract their claws by bending their fingers / toes. If you gently press the paw flat, the claws are automatically extended. It's very probable that this would happen if a child held the paws of a cat like it would the hand of a dance partner.
I think a good thing to do if you see children trying this dance is to evoke empathy in the children. Does your cat look happy? Would you be happy if someone jerked you by the arms? Would you have fun if you were a cat and someone pulled you around?
If the children insist of "dancing" with their cats, it would be safer to hold the cat with both hands around the torso, front legs resting in the gaps between thumb and fingers of either hand.