Yes, it appears that Josh took a hatchet to the boys first.
From the Salt Lake Tribune:
Charlie, 7, suffered chop wounds to the neck. Braden, 5, suffered chop wounds to the head and neck. Troyer said a hatchet believed to have been used on the boys was recovered from the scene, according to the Tacoma News Tribune.
IMO, Josh Powell was a man consumed by anger and rage. Once the judge denied him custody, his fury knew no bounds. He wanted to strike out at his in-laws, making it clear how angry he was. What better way to crush their hearts and destroy them than to take away their grandsons.
It is easy to see how Powell's overwhelming rage could earlier have been turned against his wife.