Coming from a family with severe food and environmental allergies, I can shed a little light on allergic reactions. It is extremely rare for a food allergy to cause a rash. Usually food allergies will cause hives, headaches, itchy watery eyes and/or nose, sleepiness, digestive upset, low grade fever, intestinal cramping, mood change, swelling of the mouth or esophagus, swelling of the hands or feet, flushing of the face, hands or feet, a cold achy-ness in the hands or feet, peeling of the skin in the mouth, ......... I think you get the idea. Generally, food allergies will affect the internal environment first and foremost and it is very uncommon for them to affect the outside. That said, it is uncommon, but not impossible --But
....2 kids with the same rash?? I have to agree with the others that this sounds more like a contact dermatitis, or environmental exposure. The kids should be seen by a doctor, but even that will not prove anything, as the doctor will probably not be able to give a 'for sure' answer.
If it will ease your mind, by all means give her a list of ingredients used, but do not accept blame. A stranger's allergies are not your problem!!
Hope this helps to ease your concerns......