I don't want to nitpick, but I think it is important to make sure we are on the same page here. Body Contact is legal in all levels if USA hockey - Mites -> Midget and all Girls levels. Body checking is not allowed below Bantam level or in any Girls classification.
Having said that, I have seen squirt and peewee hockey with a tremendous amount of body contact. It's all about angling and trying to take the puck away, not deliver a huge hit. It's really fun to watch. As I have seen this progress through the system in the last few years, it has changed the way Midgets play. You see lots of big hits, but generally they are clean and the players are quickly moving to gain the puck after the hit.
Personally, I think bantam is probably the right level to move from body contact to body checking. The bantam level is when the majority have the body awareness, body control, peripheral vision and mental processing ability to handle checking in a safe manner. The key is that the kids have to have good body contact skills taught to them prior to moving to checking.
I think the case can be made that checking at the Bantam B and maybe even Midget B should be limited. When I watch those levels, the kids just don't have the skating skills and body control to handle the hitting. I could go either way on this one.
Final thought, parents are worried about checking. Now more so than ever before due to all the emphasis on concussions. No way around it. If they are pulling their kids from hockey, football, lacrosse and even soccer when body contact gets "too rough" then the governing bodies need to react to that.