OK, so maybe the peanut allergy reference wasn't a good one.
But I still say that no one, not even a toddler, should have to be "terrified"-- your word-- to make others happy. If someone wanted me to do something that frightened me that much for someone else's entertainment, they would be sorely disappointed. I don't think it's fair, or kind, or anything else positive, to put a toddler into a situation where you are fairly sure they'll be terrified simply because others want to do it.