Recently built this up for my son. Its still a bit big for properly chucking about but his 20″ was on its way out and he has a BMX for that sort of stuff anyway.
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003[/url] by ianvincent[/url], on Flickr
Going with short cranks will restrict the number of gears as the most readily available ones are BMX race cranks, you will also struggle to get a front chain ring less than 34. That said, 34 up front and 9 speed out back seems to be enough for my son.
Forget the “go rigid” stuff, the more fun the kid has the more he/she will ride and the more they will learn. Pinballing down a rocky trail with no suspension will not be fun and is likely to put them off.