Now as far as I know there are no answers to these questions in the lore, but based on your knowledge and interpretation of the lore (personally I think that Daggerfall is true version of werewolves, because they seem to be a combination of Skyrim and Morrowind werewolf lore, but feel free to disagree), could you give your opinion on these questions?
1. Can werewolves even have children? I mean if the werewolf gets pregnant what happens to the baby once she shifts?
2. If they can, are the children born as werewolves, or normal persons
3. If they are born as werewolves, will they start changing immediately or do they gain the power later in their lives. If they start immediately, do they look like werewolf puppies?
4. Werewolves need to kill to satisfy their bloodlust or suffer great consequences. Now, werewolf cubs would have a hard time killing anyone, which must make them pretty sick.
1. Yes, werewolves can have children. It is a hereditary disease/curse as well as a a type of infection. In Daggerfall, there wa a Lycanthrope child you were tasked to kill. A priest explains that the curse can remain dormant for years before reappearing in a family. In the game, a father of the child was a wereboar who killed himself due to his condition. Little did he know he had passed on the genes to his son. In Oblivion, Agronak-Gro Malog inherited vampirism, a much less understood curse/disease than Lycanthropy.
2. Normal persons. Judging by real life lore and by the quest, children are born normal. The curse is dormant within a person until they grow of age, in which Lycanthropy will blossom. Now, in Daggerfall a child was a Lycanthrope who complained about sickness. He was instantly turned into a wereboar due to him ingesting Lycanthropy blood. So if a werewolf bites another Lycanthrope who is already a dormant werewolf, the curse will be lifted from the infected werewolf and the dormant werewolf will instantly transform due to the intensity of the curse.
3.Not known. But we can only assume the curse is made manifest later in their lives. And I doubt they would look like werewolf puppies. Sounds like a silly concept
4. Werewolves must kill people to survive, yes. Their health drops dramatically if they do not. Werewolf children, speaking in a sense if they had Lycanthropy already at such an early age would have to kill. But werewolf children is very rare, considering we have only met one in all ES games. And as I said, I doubt there are such things as werewolf cubs.