I have done both the Delta SYD-LAX-ATL-MCO (leave SYD in the morning, arriving MCO in the evening) and a flight that left SYD in the evening and arrived at MCO at the crack of dawn.
Even with a extra couple of hours layover in ATL, which by the way isn't a bad airport at all - much nicer than LAX with lots to look at including the Martin Luther King exhibition - it was far more comfortable arriving in Orlando in the evening and going straight to the hotel, knowing I would definitely be able to check in, have a shower, have dinner, then go to bed and hit the parks fresh the next day. Trying to drag yourself and the kids around the parks for a whole day after stepping off a 24 hours flight without much sleep and no shower and feeling skuzzy was no fun. Never again. What a wasted day that was.
A 3 to 4 hour layover at LAX isn't 3 to 4 hours of sitting around, as you have to clear immigration and customs and then take your bags to the transfer area, and then go back in through security for the domestic flight to MCO. That takes awhile. Once you're back inside, if you have any spare time you can always sit in a cafe, or look in the shops, even with the kids in tow.
However this year, in Sept we are going Delta again but aren't going via ATL as there is a connecting direct flight to MCO that leaves LAX about 3 hours after we land. I am surprised that you weren't offered this option? It was actually cheaper than the route via ATL. Leaves SYD at about 9.45am and gets into MCO at about 6pm local times.
By the way the Magical Express runs all day and night - it's just that late at night into the very early morning there is no luggage service. Personally, I've never tried the luggage service option as I find it easy enough to just collect my own bags from the carousel and take it with me on the ME. That way when you arrive at the hotel you've got your stuff.
Hope things pan out for you.