Yep, I agree, I would definitely avoid any hotel during construction, when we have stayed on site during less extensive construction work than that and it has negatively impacted our trip.
We go every August and I would say the pools starts getting crowded by 2:00, when people get back from early morning time at the parks. But in the morning hours till about 1:00, pools are pretty quiet. I feel 2:00 through 5:00 is always when the pools are most crowded in August. 2:00 - 3:00 is usually when the rec. department does the pool side parties and that's when the pools are usually really busy.
I did too, when DH wanted to stay and I thought I wasn't going to like it (I'm not into camping at all)- however we both fell in love with it and it became our favorite resort. The only Disney property we stayed at two trips in a row, we loved it that much!
Other Thoughts: Having stayed at both WL and Beach Club - I would pick WL. I wasn't the biggest fan of the pool at Beach Club, I felt that you couldn't really swim in it as it was so shallow. I think your kids would enjoy the sandbar, but as others have said the layout makes it very hard to keep track of your munchkins.
I'm sure you will love WL!