If you stay at a Universal Resort, Express Pass is included - with the exception of the new Cabana Bay. We are doing our first Universal trip this Fall and found really good prices through
AAA and are staying at Royal Pacific. Not only is Express Pass included, but it's unlimited. I believe the one for purchase has some limitations on it. So IMO, it's worth the money to stay on-site. We've found Royal Pacific to be the cheapest, including Express Pass.
They do have an "Unlimited" for purchase, but it is expensive. Most of the cheaper Express Pass options are limited.
The one you get by staying as a USO Resort (except Cabana Bay) is totally unlimited, and very much worth having.
I stayed at Royal Pacific. It's a short walk (or boat ride) to the parks from there, or you can take a Rickshaw (which is a fun experience). The Rickshaws are "free", but what that really means is that you set your own rate by cash tipping the driver. I set a rate of $5 a ride when we went, but how much you tip is up to you.
There isn't much planning required for USO. You basically just show up, do what you want, and leave.
I would recommend looking into a Blue Man Group show, they are lots of fun to see, and I think the kids (5 and 7) would enjoy it. If you contact BMG directly (use their website for the number) instead of booking your tickets through Universal Travel Company, you can get into the "splash zone". I think your kids would love that. They do provide ponchos for this experience, but I'd recommend wearing your own. The Ponchos they provide are pretty bad.
As far as the hotels, I liked Royal Pacific. Hard Rock is the closest to the parks, but that's nominal. I think Portofino Bay is the prettiest.
You are going to find your 5 year old probably won't be able to do quite a few of the rides. Go to universals website and check ride heights. Not that this means your 5 year old won't enjoy it, but you will want to know in advance what he/she will be able to do. I took my kid when she was 7, and she was able to do everything except for Rip Rocket, Hulk and Doctor Doom.
Mythos Restaurant looked really good! I didn't have a chance to eat there, because I was unaware of it before going. But, I poked my head in, and I looked at the menu. Next time we go I'm gonna check it out.
Do get park hopper.
Do NOT get the Dining Plan. It's not worth it.
Do buy the refillable Popcorn bucket
Do NOT buy the refillable drink mugs. Or, if you do, be wary. There are two types. One is for certain restaurants, the other is for refills at certain refreshment stands.
If you want, check my signature, I have a link to my trip report from 2012 there. We did 4 days at Uni, 10 at WDW.
Have fun!