Write it up! This one might even be more dangerous, since the kid could get his head in the larger part, then slide down unil it gets narrow and get injured.
"Guardrail ballusters do not appear to meet modern day safety standards and allow a 4" sphere (representing the size of a small child's head) to pass through. For maximum risk reduction of injury to small children, recommend repair, child safety netting, etc.) by a licensed contractor."