If the kid is good enough, why not? If you're going to argue on weight and size, then why not prevent true 18 year olds who are 5'4'' and 120 pounds from playing too? They might be going up against bigger players and get hurt. The bone development isn't finished in some 8th graders, true (and some growth plates in girls don't stop growing until they're 21), but the size differential might not change between an 8th grader and a 12th grader going up against someone bigger than them.
There is always a risk of injury when you play against anyone, especially someone larger than yourself, but that's a risk you (and your parents) have to take for yourself. If the player is good enough to handle the skill level of an older age group and their parents support it, aside from club regulations designed to keep good players in their age groups, there shouldn't be a reason to keep them from playing to a level that best challenges them. Yes, there will always be that reckless player who's out to hurt people...but they'll hurt you whether you're 12 or 17 for the simple reason that they're being reckless and uncaring.
There aren't that many kids who could try out for and make a U17 team at 12 anyway, so letting the parents decide that if their child is good enough to be challenged at that level shouldn't be too big of a leap.
That said as well...some 8th graders are 14 and some 15. Age-wise they could play varsity if they were good enough and a grade higher. How are we to determine whether or not they're capable of playing up simply by grade? Freddy Adu was 14 when he signed to play professional ball. He obviously had the skill to play enough to get developed at that level rather than at U14 club soccer or a JV team. Bobby Convey signed at 16, I believe. Both of them play and practice with men twice their age and with, likely, large size differentials.
Restricting play completely to ages disregards the fact that there are those who can play at a higher level AND contribute, despite their size or youth and it could possibly deny them a better challenge or development for them. If the player could be selected for and play on a U17 team and be challenged versus driving two hours north to be challenged on another team, most parents I know would choose the more local option. The choice should be one left to parents' evaluations of their children and coaches evaluations of their players. If the kid can play, unless s/he has some health problems, the kid should be able to play at whatever level best suits them.
