A friend (English with a Japanese wife) told me that the bi-lingual kids they know will only speak to him in English and to his wife in Japanese. This led me to wonder how everyone's children choose which language to use with someone they don't know. Is it appearance? Do they wait for the person to say something? My DS is 12months old and only has one word (dog) so I've no personal experience yet.
my 3 year old knows that most people here speak English so she will usually start up conversations in English. but if you respond in Italian then she will continue in Italian. when we are visiting in Italy she will speak in Italian unless you speak to her in English. i've noticed in the park that most kids will address you in whatever language they hear you speaking in. don't know if this answers your question.