Hello I found your engine at the devmaster.net database and I think the engine is absolutely fantastic. I wanted to make a few freeware games with it before I decide to buy, but I was intending on making kid games and children usually have lower end hardware. Would it be possible to turn the shaders on and off when needed?

I was going to make a really simple water gun fight first person shooter. I was going to call it "Water War" but I don't know if I can use this engine for it because the shaders are really demanding of my intended audience.

You can turn the fx off using App.flag=APP_NO_FX;, as said in first tutorial. But even then you will need graphic card with shader support.

The engine is mainly targetted for next-gen graphics, and Shader Model 2.0 is requirement.
You would have to set the lowest graphics options for best performance on old systems, (please check documentation\programming\performance optimizations)