My son and I stayed for 3 nights a couple weeks ago. Having stayed at all 3 Disney property hotels I would have to say that the DLH is my least favourite, reno and all.
For our family the cost of staying "on site" is well worth it, I love walking through DTD to the parks and not down Harbour, in fact the only time this last trip I even saw Harbour Blvd was when we were on the monorail. That being said the walk through DTD from the DLH is far, or at least it seems far to me I prefer the walk from the PPH and GCH.
If your kids are older and will use the pool at the DLH then I think it's a good choice. The pool was the one thing I disliked the most, with a toddler, the pool area wasn't the greatest, especially since I was travelling alone. The entire pool is 4ft deep and the only area with shallow water is around the watersides and though they have a toddler size slide if you're a single parent you have to get doused with water to get your child to the top of the slide then walk back getting doused with water so you can "catch" your child at the bottom. Luckily the CM was nice enough to "watch" my son while I went back around to catch him.
Not sure if that helps in your decision making at all. But enjoy your trip whatever you decide.