We were just there in July with a 3-year-old who does not like to stand still and a 14-month-old. I purchased Tour Guide Mike and followed everything he said, and despite it being a VERY crowded time of year, the longest line we waited in with the kids was 10 minutes. We were able to keep DS3 happy by looking at all the nice things that were there in the line, or even watching part of the ride as we got close. Seemed to work for my son.
The longest DH waited in line was for Everest, he was gonna FastPass it, but it was a 30-min wait and I was by the Triceratops Spin with the kids which had no line and he went ahead and waited on the standby line. Other than that, DH had to wait 20 min when returning to Soarin with his FastPass which I got for him when the park opened and I rode Soarin, as he got us FPs for Test Track for later on! We were lucky to be able to use DS3's ticket for an "extra" fastpass if we needed it, which came in handy. Neither of my sons was 40" when we went so they couldn't go on those rides. After obtaining FPs for Test track, DH took the kids to the Living Seas pavilion since we were meeting at Turtle Talk. That kept them busy. While I rode Test Track and DH waited for me to ride, they had the Kidcot fun stop. They also had cars on display (and for sale!) and DS3 loved that! While DH rode, he colored by the Kidcot stop. While I rode Dinosaur, DH had the kids in the gift shop looking at different dinosaurs, and the CMs had no problem with DS3 playing with the stuffed ones. DS3 did not ask me to buy him one either, miraculously! While DH rode Dinosaur, I took the kids for a walk while they rode in the double stroller, and we got a spot on line for Festival of the Lion King just as DH was on his way there to meet us (he got there literally 30 seconds after we did!).
Plenty of things to keep them busy. Just pay attention to all the touring tips on these boards. You are also going at a much less busy time of year than we did so I don't think you will have any problems. Oh also...get to the parks super early! You will be able to get so much done in a short period of time. We got there 45 min before opening each day (I mean to the place where they check your ticket, NOT to the parking lot). We left the park everyday by 2PM the latest and returned at dinnertime (or not at all to a couple) (afternoon naps and cooling off!). This was great, and many people were just getting to the park when we were leaving in the afternoon! Many people park-hop and spend the earlier part of the day at one park and then switch after lunch, and there are others who just sleep late and go later on and stay late at night. And, by doing what we did, we did get to see and do EVERYTHING that was on our wish-list! I did not anticipate being able to do so, but we did it and had a blast!
With my dd we really never had a problem with the lines (We have gone for the past 3 years in September). We talk about the ride she is going on and the characters for that ride. i.e. pooh - we talk about the characters and her favorite one. We also play games with letters and colors. 
. I was worried about it being too hot in August. I did see a great hint to place a small frozen ice pack in the back pocket to keep them cool. We bought the pocketbook one this time since she is obsessed with pocketbooks and it was cooler for the August heat. We will see how much we use it!
