I saw that you posted a while ago and thought that I'd give you a reply.
Pin trading is easy. Here's a link to describe it more and there's an additional link at the bottom of that page...
http://disneyworld.disney.go.com/wdw/special/specialindex?id=DisneyPinTradingPage
Basically, when you see a CM - say "may I see your pins?" They'll say "sure" and hold them away from their body and let you look. If you see one you like, pick one of yours (they can't already have it) and say "I'd like to trade for XXX". They'll remove their pin trade with you. They'll usually let you keep the black mickey mouse head back if one of the pins has it. Your pin has to be an official disney pin - it will have "disney" on the back. If you don't see any that you like, just say "thanks, but I don't see anything" and walk away. It's that easy. They MUST trade with you if you have an official pin that they don't have (which usually is the case).
Also, if the CM is wearing a green lanyard - it's for kids only. If there's a pin turned around backwards, then it's a "surprise". You don't get to see it until you have traded for it.
Definitely let you nephews get into it. The CM's may have additional pins (in their pockets) and on our last 2 trips my DS8 and DS3 both received 2 lanyard series pins that the CMs just GAVE to them AFTER a trade. (free) It was REALLY cool and my kids loved it.
Also, we ended up carrying our sons lanyards in my backpack most of the time. The lanyards become scratchy around the neck and are a little bit of a pain on rides. My DH and I ended up buying hats and wearing ours on our hats (not baseball hats, bucket hats - the baseball hats make the pins dig into your head - ouch!!!)
Good luck and enjoy.