So I've read a lot of people saying that the 2nd generation could have been better implemented into the story by not not making them children, but independent characters. I wanted to start this thread to share ideas/headcanons for how they could have fit into the story.
Percy and Midori could still be the offspring of Arthur and Kaze, as the age difference between them and their parents seems large enough to make this possible. I also think that Selkie could still be Kaden's daughter, because he could possibly be far older than he seems, as he is a mystical being.
My headcanon for Caeldori is that she is Kumagera's daughter (or another high-ranking Hoshidan general). I got this idea because she admires her father in her support with the Avatar, and Kumagera is a pretty badass (in my opnion), so this would make sense. She than joins the army because she wants to help her country and her father in the war.