I guess what I wrote wasn't clear. It's neither the psychiatrist's orientation nor the psychiatric interview method that bugs me, but rather the writing method, which is no method at all. Freud didn't just take the raw notes of his sessions and dump them on some unfortunate editor; he shaped them into a narrative. Obviously Sereny distrusts narrative itself as somehow limiting--if she doesn't, then the choppy structure of this book has another source, which may be just bad writing.
On the question of when surveillance becomes Stalinism: Of course there's a distinction between A) blowing up animals with firecrackers and the attempted strangulation of one's playmates, and B) bedwetting and finger-sucking. But you don't need a psychiatrist for A--it's violence, and all states everywhere respond to violence with surveillance, treatment (sometimes psychiatric), and punishment. But I think that Sereny is specifically urging that we take more account of B, so experts like her can "unlock" the mysteries of childhood for us. But finger-sucking and bedwetting (and I hasten to add, now that you've gone on the record, that I have no "personal experience" with it, either) don't rise to the level of justifying state interference.
I think there's a brief for preemptive psychiatry in the book's implication that it tells us "why children kill." The book doesn't deliver on this promise, of course. It tells us why Mary Bell kills--and the way it has been flacked as shedding some light on James Bulger's killers or the pre-Littleton schoolhouse massacres in the U.S. strikes me as exploitative. In fact, it really is a funny kind of memoir sandwich. The top slice of bread is the murders, the bottom slice is the horrible abuse that poisoned Mary Bell as a moral animal, and the stuffin' is a prison memoir. Read as such, it reminds me a bit of Brendan Behan's Borstal Boy, right down to the angry unrepentance that is very much at odds with the two "bread" parts. (In Styal women's prison: "How some of them ended up in prison I'll never know. They'd taken it all, time and again, but when abusing them was no longer enough for their husbands or whatever and they started on the child or the kids and she hauled out and killed the bastard, she gets life imprisonment.")
I haven't read The Case of Mary Bell, but in light of Cries Unheard, it doesn't speak very well of Sereny that she championed the "psychopath" explanation in her earlier book, since she spends plenty of time in this one not just refuting it but heaping scorn on those who embraced it.