It's amazing isn't it and just goes to show how differently animals think and how they're really not 'almost human'. I've read or heard something about the psychology of this - can't remember if it was in relation to dogs or cats, but if I remember rightly (not necessarily the case!

) it's about body language again. Our pets learn to interpret our body language and having learnt ours find that most human objects of similar size do similar things and are therefore 'safe'. If they do diferent things (shout, clap hands, scuff stones) they are not safe, therefore you keep away. But you know where you are. Then along comes a half scale human

They look different; they sound different and sure as heck they have different body language. Scoot! Take to the hills!
What to do? Don't know. I'd be reluctant to make him stay with the scary things. Does he have something he'll put his fear aside for? ham? prawns? If so maybe the children could tempt him with some? Or maybe he's just best left to his own devices to discover they are not so bad. Hope it gets better as the weather improves and he is able to meet them outside, so he has all his escape options open and won't be so terrified.
Odd, isn't it. We think we know them (fearless Alfie!) and they go and make fools of us. However, our pets make fools or liars of us so often we should get used to it I suppose
Good luck with the introductions.