I planned a trip for our family in 3 weeks last year for DH and myself, and our 3 children under 5 (4, 3 and almost 2). We were in WDW the last week in March/first week in April 2000. Very crowded time of year due to Spring Break - but the weather was lovely! I would imagine that since Easter is April 15th this year, that the end of April into early May shouldn't be too crowded. We are going for two weeks this year in May between mother's day and Memorial Day.
Here are a few of my suggestions:
1) Rooms - yes - renting DVC points would be a very good choice. For your family, a studio at Old Key West or the Boardwald would be ideal. Be aware that points for weekend nights (Sat & Sun) are substantially higher than weekday nights. I am not sure if you got the point calculator working yet - but just in case you didn't - here's how it shakes out:
for the last week in April:
OKW studio 11/night weekday
27/night weekend
There are two views at the BWV
standard view room
BWV studio 11/night weekday
28/night weekend
preferred view room
BWV studio 14/night weekday
32/night weekend
for first few weeks in May:
OKW studio 10/night weekday
24/night weekend
standard view room BWV
BWV studio 11/night weekday
26/night weekend
preferred view room BWV
BWV studio 13/night weekday
29/night weekend
I believe points rent for $10 and up per point. Standard view rooms at the BWV book quickly, so a preferred view may be all that is available. The rental cost includes tax.
We stayed at the All-Star Music last year. It was a little crowded for a family of 5, but for 4 it would probably be great. I think the best rate for April/May is $99 + 11% room tax. Maybe a
AAA or Disney club discount would get you 10 % off (not sure about this).
There may be some opportunities for annual pass rates at the deluxes or moderates, but they have not been announced yet beyond mid-Feb. You only need 1 annual pass to get the rate - so you could get one for your 3 yo (the least expensive option). If you were lucky - you may be able to get a Contemporary wing room for around 170 -180/night.
For our trip this year - we are splitting our stay between on and off-site. I have never stayed off-site b/4, but the prices for suite rooms w/ full breakfasts are amazing. We are staying in a Fort Wilderness cabin for 6 nights and at a suite hotel in LBV for 6 nights. The off-site suite hotel is $79 + tax/night. Off-site can definitely safe you some $$.
2) Getting there: We drove to WDW last year, and will drive again this year. We drove through the night, and the kids slept 8/10 hours - amazing. This is not an option for everyone - but it saves a family of 5 lots of money.
3) Buy the right tickets! I am not sure of the length of your vacation - but for your kids ages - a 5 day park hopper would be ideal. If you go to 6 days you have to get the park hopper plus tickets. At the age of your kiddos - they will be just as happy at the hotel pool as a water park - so opting out of the plus options can save you some bucks. I think joining the Disney Club pays for itself to get the discount for the tickets. Your 2 yo is free too! That is the best!
My kids (probably under my influence!) love WDW! They remember so much!! Anyway, I have always had a serious Disney addiction - and now that I have the kids hooked too - we are buying APs this year. I am hoping to get 3 trips in this year. Something to consider. Not a real budet type idea, but once you have the APs- you have a great excuse to plan a second trip!
4) Misc Tips:
Bring two inexpensive umbrella strollers - saves lots on renting in the park. Character meals were a big hit with our kids. Have breakfast and keep snacks in your room.
You will have a great trip! Enjoy your planning!
Hope this helps!