Thank all of you for your input. Even though I still have quite a bit of time to change my mind, I think I made a decision about what I plan to do!
Eliza61 mentioned taking money out of the equation and thinking about how I would want to vacation. When I thought about it I realized for a first Disney trip, I think I really would like to spend the majority of the time in the parks. Not push my kids to the point of exhaustion, so if we needed a break we could take one and go back to a place where we could relax, either in a room or in the resort. I realized that I really do want the dining plan, not just because I crunched the numbers on that and it actually will save us money, but for the dreaded reason of prepaying for most of our meals. I say dreaded because I always thought it was a bit silly, until I told my DH about the way the dining plan works and he is all for it. Why? Because he loves to cruise and likes the fact that our meals are included in our cruise price. That's the way he likes to vacation so it makes sense he would enjoy the dining plan and use it to it's fullest. No, we don't eat out at fancy places at home or order dessert when we go out or order a drink when we go out, but we sure do when we cruise! I love not having to cook and clean on a cruise, and even though we've never cruised with our kids before, I think I would appreciate it even more not having to do that on vacation with them since I do all of that at home. This trip really is for them, but I should make it as fun as possible for me too! I don't mind driving at home, but maybe I won't really want to at WDW. Staying onsite would at least give me that option.
So even though I could do this cheaper, I think I decided I want to "plan" for a 6 or 7 night trip onsite at a moderate resort, most likely POFQ, but I'll do some more research to see if I find one I like better and cheaper than the royal room at POR or POFQ. I'll research the values too, but i think i would prefer a moderate. The main reason for going this route instead of renting DVC is that I want the convenience of being able to change my mind up to 45 days before the trip. So if my car explodes in March, in April I could either find a good last minute deal offsite or switch to 3 nights in a value resort and just go to MK and Epcot, my girls will have fun no matter how long we stay. As nice as it would be to stay in a deluxe resort (except for that pullout sofa!) POFQ seems to be a nice compromise - the only thing I would really miss would be the microwave. But the main thing is that I can save up and pay for everything over time by booking the package. Now, depending on how much I save up between now and August, I still may go the DVC route, just to have about a third of my trip already paid for, which would be nice. So I may end up going with option 4 after all. But I think my goal will be to book a 7 night package, then drop a day if I decide I want to save a bit of money. I have well over a year to save up for this trip, I think I have finally given in to paying a little more for the convenience of onsite! Knowing how frugal I am, this is a big deal!
But since I don't anticipate this being our only Disney trip, maybe offsite would make a bit more sense when my girls are older and we really might need the space, and once I was a little more familiar with how to get around the area.
I feel pretty good about my decision, planning to book a package will give me a lot of flexibility. Now I'll just focus on learning more about the different moderate resorts and start our savings plan!
