We've stayed at AKL in a Savannah view room and CR in the North Wing. AKL is absolutely fantastic and unique -- perhaps one of the most amazing hotels in the country (I travel a lot both on business and pleasure, so have some basis for that opinion).
Having said that, there is no question that with young children, I would pick the CR North Wing. We loved it. The room decor is really ugly, I must be honest, but the rooms are huge -- with plenty of room for two queen beds, a day bed with a large table at which we easily gave the kids cereal each morning, a big bathroom with a separate toilet area. Also, we had a first floor room with a patio. We had a standard view room which looked out on a pretty pond with trees and hanging moss. There were bunnies and ducks. We loved stepping out on the patio and it made the room seem even larger than it already was. We could not sit out on the patio in the evening because the "no-see-ums" ate us alive. But, we enjoyed it at other times.
We think the convenience of the monorail with children, not just to MK but also to Epcot, could not be beat. Your kids are young enough that I think you will enjoy the monorail convenience more than they would enjoy the ambience of the AKL. I will say I thought the walk to MK was too long to do with young children -- it was considerably farther than I thought it would be. Also, some complain that the wings are a bit farther from the monorail than the tower rooms -- true but not a problem for us. The kids loved riding the monorail and the fact that it passed through the hotel. They missed riding the monorail this year when we stayed at the Dolphin.
The pools at CR are very nice. We loved the quiet pool right on the lake's edge. There is a great slide in the main pool. We did have a bird "poo" problem with lounge chairs at the pool. The staff could do a better job on that. But, we were there during Hurricane Charley, so have to cut everyone some slack. The hotel staff were great during the hurricane.
As for the comment that under a certain age, kids won't appreciate the trip. Well, I'm taking my parents and niece to
Disneyland in Nov. My niece is 18 months. DH said isn't she a little young to enjoy it. My answer -- yes, but grandma and grandpa are the perfect age to enjoy it with her. She may not remember the princess lunch -- but they will for the rest of their lives. So, we'll take her on the rides appropriate for her age, let her see new things, practice her walking when she's tired of the stroller, talk to the CMs with her limited vocabulary and I know we'll all have a ball! She won't remember it, but we will!