I don't think that vanity sizing has reached the kids department. However, there are more choices in kids now, because of different physiques. There are plenty of girls slims, and plus size choices now. When I was a kid, you had to order slim and plus out of a Sears or JC Penney catalog.
My daughter is in 3rd grade, and is wearing a size 8 slim, or 8, depending on the cut. This is about the same size I wore when I was the same age...so I don't think that vanity sizing has come into play.
The problem really is Wal-Mart.

If you are a hard to fit/find size, then you are going to have to probably get clothing somewhere else. This goes not just for tiny people, but also for talls (my stepmother is 5'11" and has trouble finding one piece swimsuits that have a long enough rise, pants that are long enough, etc.) or for women who are very short. You simply have to go to nicer department stores where they sell petite size, tall sizes, bras that are meant for DD+ cups, or extra small sizes like 0's and 2's-basically if you are smaller or larger in many capacities than average, you aren't going to have much luck with Wal-Mart or K-Mart type stores.
Have you tried eBay? Lots of clothing in these sizes/styles are listed on eBay for less than retail.