it seems to me that your original assignment and then the second question are two different ideas. The first part of your assignment is about a personal reaction to the story. The second part of your assignment is a question about the author's style. I am happy to give my reaction to the story and then talk about how the author's style brings the story to a personal level while still giving it distance.
Because this story is about a warped sense of justice, my opinion is that I would leave Omelas. I would at least hope to be one of those few refusing to stand for injustice. In my opinion, the goal of this life is not to achieve happiness but to show brotherly love to all. To sacrifice an innocent child for that elusive happiness would be cruel and even criminal. This is why people sometimes leave Omelas, and why I think I would leave Omelas.
The author of the story is a master at achieving a personal connection with some emotional distance. Due to the seriousness of this subject, both of those qualities are necessary. A personal connection must be established because the reader will have to feel connected to the people in the town in order to decide for himself or herself whether he or she would be on the side of happiness or on the side of desertion. The way the author achieves this is by presenting the ultimate vision of childhood happiness: playing games, attending festivals, riding horses, walking in fields barefoot, listening to glorious music, etc.
Now, how does the author achieve distance? The child who is mistreated is not the focus of the story. The happiness of the town is the focus of the story. In fact, just as the child is hidden from the people of Omelas, the child is hidden from us in the midst of the story. It is so much easier to hide injustice or to ignore injustice than deal with it. Blissful ignorance is the key to happiness here.
In conclusion, it is the distance spoken of above that is what make the story palatable to the reader. if the focus was on the unjust treatment of the child, then the happiness of the town would no longer be palatable.