So, interesting question. On one hand, they're kids - do they really deserve that sort of thing? then again, Lampwick was one rotten little boy! He is a bad influence on Pinocchio, wanting to get into fights just for the fun of it as he chews tobacco and smokes a cigar at the same time! Originally this was going to be a candy island where it was temptation for the sweets that led to the boys' downfalls, but Walt felt that little boys with absolutely no supervision would go act completely crazy. That's an interesting take, but then again, I look at humanity and wonder if he was really that far off. And that's the point - it is allegory, a lesson. Maybe the boys didn't deserve to be turned into donkeys, but Pinocchio did learn his lesson, which was the entire purpose - so that's the justice right there.