"A bunch of five year-olds" suggests that there are five of them, and they're around the age of one.

Sorry, I disagree. A "bunch" suggests a bunch, meaning that there can't be a bunch of five one-year olds. That would be like saying, I have several five pairs of tickets to the show tonight. Okay, you can rationalize the meaning and try to make sense out of that, but English is not spoken this way. However, adding the second hyphen is important to make it one word, which is another way to think about it. He is a five-year-old boy, not a five-year old boy and not a five year-old boy. It's easier to read too.