Both of my daughters are modeling. My oldest has been doing it for 2 years and I got my baby signed with the agency at 3 months old. It does take a lot of time and can be expensive if you get professional headshots, but you can also use good photos from a portrait studio like JC Penny or Sears. I also just put great staged photos I took of my baby on the industry website and she got called straight for 2 jobs, without an interview (called a go-see), from those photos. You don't have to pay a legitimate agency anything since they will generally take 20% of whatever work you do (not a bad deal since most jobs pay $100-$150/hr).
You will go to more go-sees than you will get jobs. In most cases you will have a scheduled time to go, and other's will be an open call (aka Cattle Call) which can be crazy, but if you get there before the call time you can limit your wait. You just bring toys and snacks for the child and usually end up talking to other parents and the kids play together.
If you have the time and aren't already heavily scheduled, it can be a fun experience. I've learned to take advantage of the go-sees or shoots and see things in the area.
If you're still interested, you can check out my kids agent's website, http://www.modelsincagency.com/services.html. Another agency I hear a lot at go-sees is FORD in SF, http://www.fordmodels.com/offices.
I've read the other posts, and basically it is what you make of it. We've had fun and no bad experiences. Please contact me if you have any other questions or just want to talk more.
S.