I remember when John Major resigned in 1995, the Put Up And Shut Up business, it was announced during Newsround as breaking news, then they carried on for about thirty seconds before being faded out and replaced by the proper news. ITV couldn't do anything though as they had England playing in the Rugby World Cup at the time so they were reduced to on-screen messages and eventually John Taylor the commentator had to read it out ("the players certainly not aware of that").
I remember watching that at the time, it's possibly the last time Newsround did breaking news and as you say they were very quickly faded to black and then over to the grown-up news.
I don't think there was either. I can't remember what the lunchtime schedule was at that time but there was an initial newsflash at whatever junction BBC1 had between 1:30 and 2:00 (after Neighbours at 1:50?) Incidently that obituary programme was finished very late - it was still re-cueing in the edit suite when the ident was being played!
Back then in the early days of News 24 it was a very separate setup to the main BBC News programmes and was treated with much less importance. It's not been that long since the 2 have been fully integrated
I can distinctly remember the news flashes, with Jennie Bond. The initial report suggested she had been stabbed.
I remember seeing the first reports on Sky News, BBC One were in Neighbours and I'm pretty sure they did have a short news report with Jennie Bond before moving on to the next programme. Sky were doing a lot of phone interviews with one of their overnight presenters at the time, who apparently was a friend of Jill's.
As you say, the first reports were of a stabbing and I have a vague memory that during an interview with the police detective leading the investigation towards the end of that night's Six o'Clock News, he accidentally mentioned that it was a shooting before correcting himself.