Hi there!
If you have 3 days to spare...plan on doing them at Universal, you and your kids will absolutely love it.
As far as on-site versus off-site goes, I would suggest staying on-site. The price difference might look quite large at first, but consider the perks and it usually evens out. First of all, if you stay on-site, you will be issued a room key for each guest that can be used as an express pass in the parks. This means you get front of the line, on everything. You can buy express passes individually as well, but with the kind you buy seperately, you generally only get to go to the front of each line once. The room-key version will allow you to go to the front of the line as many times as you want.
There is plenty of stuff for kids to do at both parks. IOA has Suess Island of course, but there are also rides in Marvel that they can do, most of the Jurassic Park area is dedicated to kids, as well as the water rides and Popeye's ship which is a giant playground. At USO there is an area called "Kidzone" which has Curious George and the Ball Factory, Barney's show, Woody Woodpecker's roller coaster and Feivel's giant playground. Shrek and Jimmy Neutron are also kid-themed. I've copied the height requirements for you below, so you can see what exactly you're looking at as far as restrictions go. If you and your husband DO want to do the thrill rides, you can use Baby-Swap as well. Baby-swap works like this: Your family waits in line (the express line if you stay on-site, which doesn't altogether eliminate a line but cuts it down to just a few minutes), when you get to the ride, an attendant will direct one of you to take whoever is too short and go to the baby-swap room to wait. The rooms are air-conditioned and most have TVs. While you wait with your kids, your husband rides the ride, then after his ride, he will come sit in the baby-swap room and you get your turn on the ride, without having to wait through the line a second time. I love it. I think it's a brilliant idea

Anyways, here are the height requirements...
NOTE: Children under 48" (1.22 meters) must be accompanied by an adult at all times and on all attractions.
Revenge of the MummySM- Must be at least 48"
Jimmy Neutron's Nicktoon Blast- Must be at least 40" (persons under 40" can experience this attraction from an adjacent stationary location.)
MEN IN BLACK Alien Attack - Must be at least 42"
Woody Woodpecker's Nuthouse Coaster® - Must be at least 36"
Jurassic Park River Adventure® - Must be at least 42"
Pteranodon Flyers® - Must be at least 36" (36" to 56" must be accompanied by an adult)
Dueling Dragons® - Must be at least 54"
Flying Unicorn® - Must be at least 36"
Dudley Do-Right's Ripsaw Falls® - Must be at least 44"
Popeye & Bluto's Bilge-Rat Barges® - Must be at least 42"
Incredible Hulk Coaster® - Must be at least 54"
The Amazing Adventures of Spider-Man® - Must be at least 40"
Doctor Doom's Fearfall® - Must be at least 52"
The High in the Sky Seuss Trolley Train Ride! - Must be 34". (Children 34" to 48" must be accompanied by an adult.)