As long as the children think he's really there it's all good. Although I saw one kid burst into tears during the show when we were there, which probably wasn't quite the idea!!The story is they are both images and not real. They are based on fear and come out of the canon Jedi temple to test the students. So if you actually watch the show, it makes perfect sense.
If Darth Vader was really there, wouldn't he just slaughter all the children?