1) The Sefer Toras Chayim (by Rav Avraham Chayim Schor, c. 1560-1632) here (69a, DH Katan) writes that Rabah did not mean that minors can never father children. Rather, he maintained that most cannot, but a minority can. The Toras Chayim states that the Gemara on 69b means only that in the earlier generations some could have children at such an early age; but even in those times most only could give birth at the age of 13.

The Toras Chayim provides support for his position from the words of the Rambam in Hilchos Gezeilah v'Aveidah (8:7) who writes:

"If the Ger was a minor, one does not have to go around searching for an heir since there is a Chazakah that he has no heirs."

We note that Rambam writes that there is a Chazakah -- we can assume -- that he does not have heirs. He does not write simply that he has no heirs. This is because there are some who do have chlldren at the age of 8 but the majority only do after 13, so this creates a Chazakah, an assumption, that a minor does not have heirs.

The Toras Chayim writes that this is also evident from the words of the Magid Mishneh on the Rambam, who writes that the reason one is not required to look for heirs of the Katan is "d'k'Man d'Eino Molid Mashvinan Lei" -- we categorize him as a person who does not bear children. This suggests that sometimes a minor can have children but we assume that he does not because the majority are not capable.

2) The Toras Chayim cites another source for his explanation that, even in the early generations, the majority of minors could not have children. This is from Rashi on Bereshis 25:26, where we learn that Yitzchak was 60 years old when Rivkah gave birth to the twins, Yakov and Esav. Rashi writes that Yitzchak was 40 when they got married and then 10 years passed until Rivkah became 13 years old and capable of becoming pregnant. Then they waited another 10 years until they had children. The question is: why did Yitzchak have to wait until she was 13, since we learn in Sanhedrin 69b that in earlier generations they had children at the age of 8? The Toras Chayim answers that even in the early days, it was only a minority that could bear children so young, but the majority could not do so before 13, so it is not surprising that Rivkah had to wait until she was 13 to be considered old enough.

3) We find support for the Toras Chayim from the Rishonim:

a) The Toras Chayim was a very siginificant Acharon but was not a Rishon, so it is valuable to have much earlier support for what he writes. The Chidushei ha'Ran (on our Sugya, 69a, DH Katan) provides such support. (The Ran's dates are 1290-1375, although it should be mentioned that Rav Elchanan Wasserman zt'l Hy'd writes at the beginning of Kovetz He'aros on Maseches Yevamos that the Chidushei ha'Ran on Sanhedrin was not actually written by the Ran, but rather by one of the Rishonim who lived after him. However, this still must have been hundreds of years before the Toras Chayim.)

The Chidushei ha'Ran writes that we say that in the earlier generations they gave birth younger only when we are forced to say this by what we see in the verses of Tanach. In all other cases, we assume that everyone else had children only after 13 years and a day. He writes that it is only a "Mi'uta d'Mi'uta" -- a "minority of a minority" -- who have children under 13.

The Ran is saying something slightly different from the Toras Chayim. The Toras Chayim writes that the majority do not have children under 13, while the Ran writes that it is a "minority of a minority" who do have children then. This suggests that a minor who has a child is a rare occurence, and not merely a minority occurrence as the Toras Chayim implies.

b) See also the Shitah Mekubetzes to Bava Kama 109b (end of DH Katan), in the name of the Rosh, who writes that it is a "Milta d'Lo Shekiyach," an uncommon occurence, that a minor should have a child. This also suggests that it is not merely a minority scenario, as the Toras Chayim suggests, but is actually something quite unusual.

4) Here is a source from a totally different place in the Gemara that minors can have children:

I found, bs'd, an explicit Gemara, which no one -- with the exception of the Mitzpeh Eisan to Kidushin 19a (printed in the back of the Gemara) -- seems to mention in connection with this issue.

The Mitzpeh Eisan cites the Gemara in Yevamos 47a. It is not so important for our present purposes to know the background, but I will explain briefly, bs'd. The discussion there concerns when a man is believed to disqualify his son. For example, a Kohen is believed to say that his son was born from his marriage to a divorcee, which disqualifies the son as a Kohen. The Gemara there cites a Beraisa in which Rebbi Yehudah says that the father is believed to disqualify a minor son but not an adult son. Rebbi Chiya bar Aba says in the name of Rebbi Yochanan that this does not literally mean a minor or an adult, but rather if a minor son already has his own sons, he is classified as an adult, while even if the son is an adult, if he does not have his own children he is classified as a minor.

(The reason for this is that if a man has grandchildren he is not believed to disqualify them, and since he is not believed about the grandchildren he is not believed about his child (his grandchildren's father) either; see the Rashba there.)

What is important for us is that the Gemara there in Yevamos 47a states that there is such a thing as "Katan v'Yesh Lo Banim" -- a minor who has children.

The Mitzpeh Eisan asserts that according to this, one must say that Rabah in Sanhedrin 68b -- who says that a minor cannot have children -- means to say that most minors cannot have children, but sometimes they can. He cites the Toras Chayim that we saw above who also writes this, so now we have a proof for the Toras Chayim from a totally different Gemara.

5) Rabeinu Yonah says that the status of a minor is not determined by age but rather by physical maturity, and Rav Meir Simchah says that a minor can be a biological father but not a Halachic father:

A different answer to this question is given by the Chidushei Rabeinu Yonah here. He writes that in the cases that we find (below 69b), where people gave birth to children at the ages of 8 to 9, these parents possessed pubic hairs before the births of their children. When the children were born this proved that the pubic hairs were genuine signs of adulthood despite the young age. What Rabah said was that if a person did not possess pubic hairs it is impossible that he can have children.

6) To conclude, I saw an ingenious idea in the Chidushei Rav Meir Simchah (by the author of the Meshech Chochmah and Or Same'ach) here which may help answer this question. He cites the Gemara in Gitin 43a. Again, it may not be so crucial at this stage for us to know the background, but there is an interesting phrase stated there in the Gemara: "v'Iy Amarta Kidushin Lav Kidushin Yorshin Mena Lei" -- "If you say that the Kidushin is not valid, then how can he possess any heirs?"

The Gemara seems to be saying that if a child is born outside of Kidushin, he cannot inherit the parent. Tosfos (DH v'Iy) asks how can one possibly say that? We know that if a man fathers a child from a single woman, that child certainly inherits him! Tosfos answers that the Gemara means that if a person is not capable of doing Kidushin then his child cannot inherit him. For instance, an Eved is not capable of doing Kidushin so inheritance does not apply. This is not the same as a single man and woman who could do Kidushin, so inheritance does apply.

According to this, since a minor is not capable of doing Kidushin it follows that even if he has a child, the child cannot inherit him. Rabah does not mean that a minor can never physically have a child; he means that even if he does father a biological child he will not be his child for the Halachic purpose of Yerushah.

So even though they sometimes bore children at age 8-9 in the early generations, those were biological but not Halachic children and would not inherit.

Dovid Bloom