With kids at 2 and 4 years old.. my personal preference would be
Disneyland Hotel because of the closer walking distance... assuming you are going to spend more time at Disneyland Park vs California Adventure. Not sure if DH is refurbing the place, but the rooms will feel older. However, if they still have the massive headboard above your beds where you'll see an etched Sleeping Beauty Castle with fireworks that can light up.. your 4 year old might enjoy it and your 2 year old might stare at it.
For me, nap times are huge so having the closer walk would be better.... unless your kids just nap in strollers.. then, it probably doesn't matter.
DH pools are better and bigger in my opinion. For your kids.. probably doesn't matter as they aren't big enough to go on slides. So this is an adult decision.
Neither have kids clubs to my recollection and most likely with pandemic, kids clubs would probably not be open. Grand Californian had a kids club "Pinocchio's Workshop".. but I think they stopped that. Also there were minimum age limits and I think your kids are too young.
Net, for $800 more... consider these factors:
1) Do you or your kids need to nap at the hotel.... if yes, then DH is a little bit closer
2) In your 5 day trip.. how much do you plan to stay in the parks. If you are going to maximize the parks.. then PP is more cost effective
3) If you are going to spend some time at the hotel and not at the parks... does the pool(s) matter to you? if so then DH