Fergie,
It sounds perfectly legit to me.
As an affiliate manager, I would not have a problem with this because the idea behind two-tier systems is to bring more webmasters to a program — which you have done by setting up those sites for your “children.”
We don’t offer a “two tier” affiliate system at Winward or Bingo Hall, so I am just speaking in general. But I can’t imagine any other affiliate program having a problem with this.