I used to hear it used only as a form of address, calling a particular child “kiddo” in some context, as in, “You’re looking good, kiddo,” or “Better wait a minute there, kiddo”—never speaking about someone as a “kiddo.”
It’s like addressing someone as, say, “sonny.” You might say “Nice bike, sonny.” You would never say “I have two sonnies” or “Tell your sonnies they can come swim in our pool.” Calling people “kiddos” in the third person sounds just as weird to me.
But I have heard a teacher, for example, refer to her whole class as “kiddos”—“I’m going to let the kiddos have a terrarium in the classroom.” “Half of the kiddos are sick this week.”
You know what? Referring to mothers as “moms” bothers me just as much, and that’s a pretty old practice by now. You call your mother “Mom” (or “Mum” or whatever), but she isn’t A mom, to me. It’s a name, not a category.