Not so bad
That at average age of 7, they recognise the name of a dead politician (who died prob. before their parents were born), and that he was significant in modern history, albeit the wrong event (off by 2 decades).
"Where Churchill was concerned, the association appeared to be with a talking nodding insurance dog"
Well that's hardly suprising, how many times will they have seen the advert vs. watching a history program? Replace TV adverts with short "did you know" style facts?
The history of WWII is usually taught at secondary school level, for good reasons - e.g. I still remember watching footage from the liberation of Belsen and it's not something I'd show to most people under 12 years. Comprehending the background, causes, and after-effects, with analysis, is also beyond most 7 year olds, unless you want reduce it the base level of "goodies" vs "baddies" (which is historially inaccurate).
As for Churchill being a role model, don't forget to teach the history of how Churchill sent the army in to murder striking miners, his role in the general strike of 1926 and how he was resposnible for the f**k-up of Gallipoli in the first world war, etc. (Madra, please drop dead.)
@reg I demand a "Churchill with a green mohawk" icon :-)
http://news.bbc.co.uk/olmedia/1305000/images/_1306023_010501mayday150churchill.jpg