Oh - you're going to have fun.
GREAT call on the one night onsite for two days worth of Express. It will really make your stay. We went last year in August, and I was a little worried about the heat, but it worked out fine. Early in, back for a swim and back in the evening. Also depending when in August, some schools may be back - it's not that packed.
Where should you start?
Probably the first rule here is that... It is a great deal less complicated than Disney. Complicated touring plans and reservations aren't required here.
If I were you, I would pick a park a day to start out with - with Transformers opening, I expect both will have early opening. I'd also suggest rotating through the parks, rather than trying to get to the various more popular rides earlier. You have Express. Wait times are going to be very manageable.
IOA Day
Early Entry
Harry Potter
1. Ollivanders (I know, but you should do this first if you want to do it. Really. The FJ line will not get that long. Plus, when you're really early, you're almost moving through too fast to appreciate it.)
2. Forbidden Journey
3. Dragons if you feel so inclined. Warning - you'll be the only people doing them that early and you may get stuck in the front row. Even if you don't do it, the theming is amazing - walk through.

4. Flight of the Hippogriff. (A surprisingly terrifying little coaster!)
This is the only section of the park that will be open, so you have an hour to kill here.
Three Broomsticks for breakfast if you like/have time - it's not a bad breakfast, and we've never had or needed reservations.
I would hit Jurassic Park next
Because - it's the next section over AND if you want to do
1. Pteranodon flyers (assuming your kids are within the height limit - you HAVE to ride with a kid within a certain height range) the line gets crazy long and there's no express. I've done it - it's surprisingly satisfying.
2. JP river ride - you will get wet... But it's August
3. There's a very cool rope maze/jungley play/climb/run area in JP. My kids are younger, but they love it in there. Plus water canons!
Keep walking and next up is Toon Lagoon
Since you're wet anyway
1. Popeye and Bluto's Bilge Barges
2. Ripsaw Falls
Marvel Hero Island is up next
1. Spidey
2. Dr Doom (I have not screamed like I did on that)
3. Hulk. (Seriously the most fantastic coaster. Love it.)
4. Storm Acceletron (like the teacups)
You're back at the entrance, and you've done most of IOA - just Seuss left, and you know what?
1. Cat in the Hat
2. One Fish, Two Fish
3. Caroseussel
Are actually worth it.
The Seuss Trolley is... Kindof lame.
Now depending on what crowds are like, you will have had to take a lunch break somewhere in there.
Mythos is good for a sit down deal if you want fancy - most of the park food, is, at least to me, rather disappointing. Lots of people have written about food though. Look for more on that elswhere.
I'd take a break back at the hotel and swim and such. Lots of people leave the parks around 4/5 p.m. so you could come back and complete/hit favorites. WWOHP is cool by night.
US Day
Early Entry
1. Transformers
It's kindof in the middle.
I would head back to the entrance and do the following:
1. Despicable Me
2. Rip Ride Rockit (not my favorite, it's that slow ascent that gets me)
3. Shrek if you love Shrek - I don't ever bother after doing it once years ago
4. The Mummy. (FANTASTIC!)
5. MIB
6. Simpsons
7. ET. Eh. Bit lame, but it's an original.
8. The Curious George water area is seriously fun - I know it sounds a bit babyish - but it's not. Place for you to sit in the shade and they can get wet!
Same applies as before - get lunch, take a break at some point, and come back later. There's a light/fountain show in the evening too that is pretty good.
Thoughts:
Some people love the shows, I have an 8 and a 4 year old, they're not interested. The Horror Make up show has some pretty off color jokes, and I've seen kids go into a panic when they do some of the effects. Also, clearly, we split up sometimes because my kids are not able to do the same things for heigh reasons, and I'm the only coaster nut.