HOTELS:
The Harbor Blvd. hotels are good recommendations. If you can afford to go a bit more upscale, try the Hilton or the Marriott and use Anaheim Resort Transit to go to and from the parks, especially if you want it to be a bit quieter when you are away from the parks and you want to be assured of a good bed.
KIDS:
Check out the height requirements online before you come. When I was your older daughter's age (and even today) I loved the Peter Pan ride. Snow White can be scary, so if you ride it, remind her that it is called Snow White's SCARY Adventure, and than the witch jumps out A LOT!
Take it easy, and definitely take rest breaks. I saw a mom on Sunday sitting on a bench at the Redwood Creek Challenge Trail with her sleeping daughter (about 5 years old) stretched out next to her. Much better to take a break and let everyone rest than to deal with overtired, cranky kids.
You can change diapers in any restroom (mens or womens), or you can go to the baby care centers (in DL, as you are walking toward the castle, make a hard right at the end of Main St. and it will be on your right). I used to take my son there when he was little and we needed a bit of quiet time or a child-size toilet. You can heat up baby food there, too. They have baby care stuff for sale in case you run out (albeit at Disney prices), but they're a good safety net.
There is also a center at DCA, back by the Mission Tortilla Factory, right next to the first aid station. My son, now almost 15, points out that first aid station every time we go to DCA...ever since he was 8 and we made a 3-day birthday trip to DCA for his birthday. He and his friend were in the waiting area for A Bug's Life, and some other kid bumped against him. He skinned his knee on one of the fake rocks and was bleeding all over, so off to first aid we went. (Yes, accidents happen even at DLR)! They treated him so nicely that he actually has fond memories of his accident!
OTHER STUFF TO DO:
Depending on the weather (as stated previously, it could be warm or coolish, but the water will be cold) head for the beach, even if it is just for a walk. There are tide pools at Doheny State Beach at Dana Point that are kind of cool. In Santa Ana, there are the Kidseum and the Discovery Science Center. My son always loved the fountains at Fashion Island (Newport Beach area). A bit farther away is the Aquarium of the Pacific at Long Beach.
All of them should have websites if you do a Google search.
