At the age of 6-8 I never thought was a problem. After the age of 9 it squashed the natural competitive spirit that these kids have. If everyone is special then no one is (Wasn't that a quote from The Incredibles? To be honest, I see this much less in baseball. Baseball has a great way of identifying individual weakness and exposing a kid. I suppose some folks feel the generic trophy keeps the kid from feeling bad. That whole Self Esteem thing. I always remind folks that Josef Stalin didn't seem to have a self esteem problem. Concentrating on self esteem and mitigating acheivement usually results in a kid with neither.
After the age of T-ball our teams had a program of recognizing individual accomplishments like innings pitched, best era, strikeouts, hits, and stuff like that. It required some pretty close monitoring of the boys did but it was much more appropriate than just handing out a generic trophy. Most kids got at least something but not all.
As for batting 9 vs batting everyone, it depends on the type of team. Personally, I believe that if it is possible you should try to bat everyone but my philosophy when I coached 14U was that these kids are going to be going out for high school in a year or two and they needed the practice. This was in league play.
Sitting on a bench and not playing, or only playing 1-2 innings with maybe one at bat wasn't, to me, a way to get these kids ready for the competition of high school.
But we did play in games where you played 9 and batted 10 (EH) and in those tourneys I tried to go with a high school type of system so the kids would be familiar with it. Some teams are more competitive than the teams we had, some a LOT more so they would have a different philosphy. There is nothing wrong with either type as long as you know what you are getting into when you sign that kiddo up.