Kids should be seated facing rearwards if they are under 3. In case of accident threir neck will not take the acceleration forces and you will end up with a dead kid no matter what the CAA says.
I think the FAA has it right in this instance and the CAA simply has not taken the time to update their regulations. It might be required to check crash simulation results to understand how forces are inflicted on a kid's body during an air crash, but it seems pretty straightforward..
Afaik in most of the EU it is against the law to use front facing child seats on cars for these very reason.
I would have expected a more scientific approach to some of the replies instead of veering to kinder eggs.