Yeah, August is still pretty bad - the summer crowds don't usually taper off until mid-September, IME.
The last time we went in August, it was so crowded that we could hardly do anything, and we were miserable. It is also very hot in August still. It can be pretty miserable when it is hot and crowded.
If you decide to go, get there early, before most of the crowds show up and before it gets too hot. Bring your own snacks and drinks so that you don't have to wait in line all day to buy them. It's much easier and cheaper to buy an insulated lunchbox and bring juice and bottled water. If you have a stroller, you can keep it with you, or you can rent a locker for $5.
Try to do Fantasyland in the morning, and then in the afternoon when it is hot, stick to more indoor or shaded stuff, like the shows or the Princess Fantasy Faire. There is a play area at DCA that has water for the kids to play in, and there is a playground in Toontown that has a hose that sprays water.
Don't expect to be able to do a whole lot of stuff, especially with two little ones. It is definitely do-able, just not quite as easy as in the winter or spring.