It can be seen as the bear giving the child the knife, or that the demon or the child himself hid the knife inside the bear. Also you can imagine that there is no demon and that the shadow just shows the child's murderous intent.
This is really good, I mean you even wrote down what the kids is about to do "Kill Mommy" the boy has the K on his little hand, he probably thinks that like his teddy bear, his mommy ain't gonna suffer. Scary but very nicely done.
I tend to think at that moment, when he picked up the K and reached for the knife at the same time is when he became fully possessed. That the whispers from his shadowy friend became an actual voice in his head telling him that everything was ok, this was all going to be for the best. Like you said, he doesnt even think poor mommy will suffer, Wouldnt his friend have told him so otherwise?