A young Christian I know was very upset when a person who was known to party it up was put in a leadership role for children by church leadership. This distraught person said it was highly discouraging and also stated, "It is hypocritical to put someone in leadership when they are not acting like leaders."

Perhaps that is so. While we should not shoot our wounded, we probably should not put them on the front lines, either. But primarily, if we put people who don't have their own lives even vaguely in order into leadership roles for young people, we give our own youth horrible examples to shoot for. Note this passage,  "Brothers, join in imitating me, and keep your eyes on those who walk according to the example you have in us." (Phil 3:17)

The personal lives of those in leadership should be something for our youth to shoot for.  We damage the already hurt person more and put others at risk if we are not wise in such matters.