Re: It may be
Why do you make a distinction between "legitimate" purposes and "commercial" purposes in this case? Whilst Google may gather this data to make money, the end user isn't paying for the service and is most likely using it for their own legitimate purposes. To boil it down; Google isn't selling pictures of your house. They provide a free service which has as many legitimate uses as any official survey pictures; probably more.
As for privacy, I don't understand your argument for a few reasons.
1) You claim that google violated your privacy by getting "a pretty good interior shot through my front window". Since you were the one who opened the curtains, you were apparently happy enough for anyone walking past to see inside your front room. How is that significantly different from someone "virtually" walking past your house using streetview?
2) Your ire is increased because "my two children both under the age of six were clearly visible through the window". Are you in the witness relocation program? Do you make them wear burkas when out in public? Is there some reason why you are offended by people looking at your children? Surely, there are more strangers that would see your children out in public every day than would ever see them on streetview. If you're concerned that it shows where your kids live, you'd find that it's not really hard for someone to discover that without streetview; maybe by walking past when they're playing in the front room with the curtains open. ;)
Also, your contention that you own the copyright to any image of your house and that a commercial entity must ask permission and financially compensate you, is just plain wrong. I can walk up to you in the street and take your picture without your permission and I don't have to pay you anything if I then sell that photo. That's because the copyright is held by the photographer, not the subject of the image. If google blurs or otherwise obscures an image at your request, don't mistake this as a right you're exercising. They do it in good faith, not because they have a legal obligation due to you holding the copyright.