As concerning as that might be for the three or so minutes it takes place, I don't think there will be a long lasting impact on the kid.
That said, I don't see a problem. They can't pick out people that "look like terrorists" because they'd be profiling. What they can do is inspect anyone who cannot be scanned, IE - a kid in a wheelchair.
My MIL was (RIP) an amputee and would ride a wheel chair through the airport. She would go through searches at every airport just the same. It was annoying, but it goes with anyone who cannot be scanned. They were polite, just as the TSA agent in the video was. He was not trying to intimidate the child. He was courteous, and kind.
Honestly, what do you expect? They're the freaking TSA. They have to inconvenience you as that is what all security check points are. Caucasians aren't without having some serious issue with whatever form of government they want to act against. The Bapist church that goes around protesting funerals and that sort of thing. The simple idea is that if someone wants to get a dangerous weapon past security, they'll do whatever they can to do it. Kids are the most likely to be overlooked.
It may've lasted a little long, but it was 3 minutes. Yeesh. And it was in a fairly open area, it wasn't in a locked room with a metal table in the middle.