I'm assuming you are unable to downgrade because the Category 2/3
DDP seats are sold out. If that is the case, cancelling and re-booking won't be possible. If the DDP seats are sold out, all you can do is keep trying for a cancellation (keeping in mind your own cancellation window), or try a different time that evening, or try for another night.
We have found that the 9:00 or so show is often available when earlier shows are not. Only you know if the late show would work for your family. We did the 9:00 show with two 10-year-olds last year and they managed fine. We had a good time. I'm not sure I'd try it with younger kids, though.
If all else fails, keep your cash reservation, knowing you'll likely be seated right on the front row. Though others may disagree, I don't think HDD is worth the money (the dining credits) or the trouble unless you have a seat right up front. We've done it once seated about 2/3 the way back and once on the front row. There is absolutely no comparison. When we were 2/3 back, we couldn't see a fair amount of the show, except for the short segments when the performers come into the audience. Front row was great. Moreover, the food is never worth the money, the dining credits or the trouble. The show, while awfully silly and lame at times, pleased the kids (although they nixed it for this year, thank heavens!).
There are much better ways to spend 2TS credits IMO than to spend them for second rate seats and second rate food. Better to make a reservation at, say, Narcoosee's or CG, with those credits, pay with cash at HDD and enjoy your great seats!