i think you can take the kid with you but you will not be able to go in alot of diving and snorkeling activities it will be very risky. you will find places to have fun with the kid but not all the places . am sure you will enjoy the trip . try to stay in hotel near the downtown not to fare from the town to enjoy the shopping and walking beside the sea

Yes, no need for a 4x4, you can go by one of the rental cars you find at the light house and it is very safe, you will find a cafeteria there to sit, have drinks and even lunch. And if you are searching for a good snorkeling experience, you can just continue on the same road until you rach the next cafeteria and the end of the road, that site is called "The Caves", amazing corals and caves inside the corals, one of the best sites in dahab.

Taxi hire will stay with you all day for £10