At our elementary school, we have not had a need for this type of monitoring.
Students are never on the net except under direct supervision.
At our middle school though, students are sometimes on a computer in a classroom, the library, or the lab without direct supervision. This is the procedure for monitoring that I helped establish at Chenowith Middle School in The Dalles, Oregon. We chose not to invest our limited technology funds in monitoring software. Instead we just use Netscape and a few minutes of time to enforce our district use policy. The district policy states that each student using the Internet has the responsibility to use it appropriately.