Hmm. This does have the potential to be damaging; brand recognition that companies have worked for years to develop could be thrown out the window in an instant.
Even setting aside ideas like the free speech we treasure in America, this could have deep sales ramifications. Consider what would happen if you removed the captain from Cap'n Crunch, for instance. Sales would plummet! (Of course, that particular example might not be a bad thing... Cap'n Crunch really doesn't taste very good. But you get my point.)
And the fact that cartoon advertisements themselves are banned could really cause problems. Consider, for example the impact on the animation and computer graphics design industries; I would expect a significant portion of those jobs are in advertising, and most of those probably have to do with childrens' toys and food.
So yeah, there are plenty of possible negative consequences, some of which are harder to foresee than others. Time will tell what comes of this plan...