Hi Sam,
At my company framework level business object, I've set the Auto settings to true because that's just the way I think about objects. If a child is registered with a parent, then it should delete it's children when a parent deletes, etc. This removes the possibility of orphaned records. Setting it at the company framework level sets this as the default behavior for everyone.

As far as not deleteing because some children have records, I'm not sure why you would do this, but you may have a situation where you need to. Like you said, in the HookPreDelete(), you can iterate through the childbizobj collection and see if they have any records and return false if they do.

HTH,
Randy