The papous idea is fine until their legs get a bit longer than they skelp off your thighs and it's uncomfy for both of you. They need to be facing you rather than facing out unless you have a true sit-up-and-beg riding position otherwise they will be looking at the ground moving (very fast for them) underneath them.
I did this round the streets in the village I live – didn't go offroad and she seemed to quite enjoy it – fell asleep a few times almost as I rolled out the drive – a half hour pedal round the village and all was good. I don't think it would work offroad (actually I don't think it would work on anything other than tarred road/paths – slightesy bit of moisture and it's going to be sprayed all over them).
We have a Burley Solo now – not been used since about November due to the bad weather/cold but she loves it and it's now getting ready to be hitched up for a pedal this weekend. She sleeps in it, reads and plays with some toys in it. She can see things and she can talk to us – so I think she quite likes it…isn't always keen to go in it at first but once in she is sorted.
I looked at seats on the bike but the rear ones I felt exposed the child too much and the ones in the front I figured would foul my legs when pedalling and as they got older it could become more of an issue with gears and brakes and dangling legs (potentially). So the trailer won it for me, she is only now just heavy enough to get the elastomer suspension to work – she's 20 months now.
Hoping to get to Austria in the summer and the bikes and trailer will be with us – last time we were there there were miles and miles of cycleways so we hope to go exploring for a few days on the bikes.