Okay -
major brain fart on my end... I was figuring out the cost of the room after the discount and not the actual cost of the discount.
With my brain function properly again, let me just say that my recommendation was still correct, but my math was a bit backwards as was my threshold savings point for your family.
If you're paying $80/night with your discount, your room would cost you about $135 without the 40% discount (which is the standard rate for most moderates). That means your discount is saving you about $54/night, so if you go with
free dining you are saving $88.97 by not having to pay for the dining plan for your party. Therefore, in your case, you'd save more getting free dining and paying rack rate on the room (see caveat below).
Look at it this way:
With free dining and paying rack rates you'd pay $135/night for your room and get the free dining plan.
With the 40% discount, you'd pay $80 for your room, and pay $88.97 for the dining plan for the three of you for a total of $168.97/night, so you're paying almost $36 more per night by using your discount.
CAVEAT: The only thing to also keep in mind is that I think you can only add the dining plan to your room if you're on a package, which means buying a park ticket for at least one day - not sure how that works with annual passes, so that would be up to someone else to answer.