We're a family of 6 and when we all travel we rent a house off-property. There's no way I would put us all in 2 hotel rooms. I'd be crazy by the end of the week.
I've found that disney dining, even with a big family, doesn't really save all that much over renting a house and eating what we want, when we want. Overall, I've found that the dining plan is just way too much food for our family and we do better paying OOP for our meals.
To get
free dining you have to pay rack rate on your room. If you stay in a value room (cheapest), I think rack rate is about $160 night. You'd need 2 rooms so now you're up to $320/night. I've rented a 5 bdrm/3 bath private pool home for $100/night. Free dining would give you 2 counter service meals (runs about $10/per adult and $8/per child - per meal, so about $88 for meals) and snacks are about $4 per snack and you get 2 a day so there's another $40. So with the "free" dining you get about $130 worth of food a day. You also get the resort mugs, but you still have to pay OOP for one meal a day.
We use our regular grocery budget to stock the rental house. We eat breakfast at the house and bring some snacks and water into the parks with us. Typically we eat one meal a day in the parks and then the rest either at restaurants outside the parks on the way back to the house or get something easy to take with us to eat at the house (pizza, take out Chinese, etc.). We made note of places to eat along 192 and got take out menus. We'd call in an order as we were leaving the parks and pick it up on the way back to the house.