Kids cussing on screen...

I have no idea if it is or ever was illegal for child actors to be required to cuss onscreen. However, I think it works well in this particular movie; it very much reflects what the character of Mark would have learned in his home environment.

In fact, one of my favorite scenes in this movie involves him cussing:
The cops are escorting him out of the hospital and Mark is announcing how they are arresting/taking him to jail and they have just hit his mother.
Cop: "This is not an arrest."
Mark: "Then what the hell is it?!"
Cop: "Watch your mouth, kid."
Mark: "Kiss my ass, you stupid jerk!"

I've seen this movie countless times, and yet, with every viewing, I just want to applaud Mark in that scene. And I think that Brad Renfro did an incredible job with it.

If child actors are required to cuss or perform other socially unappealing acts as part of their roles, I would imagine that the involved adults (e.g., directors, other actors, acting coaches) would take care to ensure that they understand why their role calls for the behavior and that the behavior is only appropriate when they are portraying their characters.

I'm not aware of any real life laws forbidding children from swearing so why wouldn't they be able to do it on screen?

They're just words. Crass yes, but illegal? No!

You're Perfect Yes It's True.... But Without Me You're Only You

You should have heard Bad News Bears before they cleaned it up. Parents went nuts at the thought of their pre-teens talking like that.

We're gonna need a bigger boat.

Films can't break the law and go on general release. Every country has film censorship boards that vet and rate films before they are allowed to be distributed.

Check out Hit Girl in Kick Ass to see a little girl drop the big C word.

No there is no law that makes it illegal for kids to cuss in movie. There are laws that discuss age requirements, where a teen of a certain age cannot do love scenes with an adult of a certain age. Largely the cussing is character development, which emphasizes either how bad they are or economic or parenting issues. In reality there are kids who act like Mark. You can't sugar coat everything just to appease parents.

Tight ass much?

Ahh seriously?! That's your complaint? I mean, when have you been around tweens and teens of late? In the real world they cuss just as bad, if not worse, than in this film.
It's sad I know, but no less true...

It is not illegal for kids to swear, in a movie or otherwise. It's their first amendment right to say whatever they want. It may not be appropriate for them to swear but it is not illegal.