We have stayed at all the monorail resorts and the Poly was our least favorite of the three. I think the PP idea of renting points for a 1bdrm is a great idea. Or renting points and staying in a 1 bdrm at Wilderness Lodge is also an option. The plus to a 1 bedroom is the kitchen. You can have groceries delivered (think breakfast, snacks, diapers, etc) and save some money (and I always knew my kids were starting off the day with something relatively healthy to eat). Also, the joy of having a washer and dryer in your unit with little kids is not to be overlooked. When my kids were little, I would throw stuff in the wash when we came back for our mid-day naps and then again at night before we went to sleep. Two major plusses: you can pack less and you don't go home with heaps of dirty clothes.
I have never understood people who say that with little kids you will spend the majority of your time at the MK. We never found that to be the case. I think by skipping or limiting time at the other parks you are missing some really great things for the little ones in general (Turtle Talk with Crush, Playhouse Disney, Little Mermaid, Star Wars Jedi Academy, Figment, etc.). And your 7 year old would definitely be missing out. Our kids have never said that MK was the their favorite park at any age that we have taken them there. They liked all the parks and would have been really upset if we had skipped some. I think you will be pleasantly surprised at how much there is to do with young ones at each of the parks.
I would also encourage you, if you don't plan on skipping Epcot and DHS, to look into the BC or the BW. You can stay in regular rooms or rent points to stay in the villas. You have a 5 minute walk into Epcot and you can walk or take a boat to DHS. We never had a problem with the busses at either resort and we have stayed at peak times. We also liked walking through Epcot and taking the monorail over to MK (must have a park hopper to be able to do this.)
As far as busses were concerned, we looked it as a built in break for the little ones (and us) where we could stop and "smell the roses" so to speak. It gave us time to chat about what we had already done, what was everyone's favorite thing so far, search out the amazing details that Disney puts everywhere, etc. We are a pretty laid back family and aren't bothered by waiting 10 or 15 minutes for a bus. There is always something to look at. As a matter of fact, my kids considered all forms of Disney transportation to be rides in and of themselves. They would get soooooo excited to ride the Mickey busses!!!!
Only you will be able to judge your touring style and the personalities of your family and what will work for you. No matter what you pick, you will have a great time and the resort will be beautiful and fun.
Good luck with your decision!!
P.S: We have used Dave's point rental web site before and we wouldn't hesitate to do so again!!!!