I rarely take my kids to movies - my 5 year old DD has seen A Bug's Life, Toy Story 2, The Emperor's New Groove, Thomas and the Magic Railroad and Rugrats in Paris and now Shrek. My 2 and 1/2 year old has seen Thomas and the Magic Railroad and Shrek.
I counted exactly 2 occurences of the word "***" in relation to the donkey, but with inuendo. Don't forget, "***" really is a word for donkey and not considered foul language when used that way. The sexual inuendos were way too subtle to be perceived by young children. And, the violence was all cartoon violence and definitely no worse than Disney violence.
We all (including the 2 and 1/2 year old) loved the movie. It told a beautiful story in a clever way and had a wonderful moral to be learned.
The movie did parody Disney movies in a sarcastic manner. Don't forget it was executive produced by Jeffrey Katzenberg and this was probably his revenge at Disney. While my husband and I thought the jokes aimed at Disney were hysterical, I could see that perhaps some diehard Disney fans (which there are more than a few of on these boards) would dislike or not relate to the movie because of this. There was also some good use of rock music which you may or may not be a fan of. I personally enjoyed it, but I tend to like all music unless extreme.
So you need to decide for yourself whether this is a movie that you or your kids will enjoy. My gut feeling is that most of you will like it. But, then again, with young children we don't get out too much!
Ran into several people that I knew at my small neighborhood theater. Everyone I ran into loved the movie as much as we did.