So, how ethical is this story exactly?
I'm not expert on philosophy, but I'll approach this topic from two different formats: one, from a Kantian perspective of ethical understanding, and second, from a utilitarian perspective, and analyze the differences between the theories.
According to Kant, this is simply inhuman. Kantian theory relies on a set of values and barebone essentials that we as humans, no matter the circumstance, must understand as well as perform within the confines of our grasp. To Kant, there's a required sense of motherhood to the care of a child, where no matter the cost or external output, every child deserves a supposed 'motherly touch.' Hence, Kant would not only walk away from Omelas, but in the same way, try to destroy it. It preserves the concept of false happiness provided through another's suffering, mirroring the concept of 'one must die for a million to survive.' Within the confines of Kantian theory, this child is being denied the basic of human essentials, rotting in its own filth, without the care of a single human being, and because of this, the conscious of the entire city is put to shame, put to disgust, and thus, the action of torturing the child for preservation becomes gruesome and beyond unethical.
The utilitarians have a separate perspective on the theory of suffering. Utilitarianism is the idea that whatever maximizes pleasure must be the most ethical, objective action. In this case, it is only 1 child put to suffering, and the child will not perish, but rather be taken care of in the most minimal fashion by the surrounding community. As a result, the rest of Omelas gets to live a life of prosper and happiness, and only bears the weight of guilt upon the suffering of the child if they choose to. If one chooses to ignore his inner conscious and allow the happiness of the surrounding community to make life worth living, and they understand the consequences of taking care of the child, they not only serve no harm, but the suffering of the child is the best thing for the community. In exchange for one small bit of hurt, the many others, with the option to leave whenever they wish, maximizes the level of output pleasure, and the action, to them, becomes morally obligated.
Personally, I value the Kantian perspective. To an extent, the ability to leave whenever one wishes gratifies a personal opinion on the value of suffering. But the care of a child rests on maternal gratitude and personal understanding of the morals of a mother's care, and the perspective of childhood being a time of understanding the external and creating a grasp of the surrounding atmosphere. When a child is taken away from said experience, they are reduced to less than human, understanding the basics of nature from an animalistic perspective. Thus, the complexity of understanding is taken away, and it is no better than abusing an animal who doesn't know any better for the sake of self-gratification, and at its barren core, has no moral obligation.
To thus, I see the Omelas people as, from an ethical perspective, cruel, inhumane, and unimaginably barbaric.