There is plenty to do for kids at Ko Olina. We took our two this past year for the first time and they loved it. They were just a few years younger than yours.
At the resort, there are several pools which are excellent for kids (waterfalls, slides, etc). The lagoons are great and safe to swim in, given very little current. They are't the best to snorkel in though, as they are mainly sandy bottom with limited coral. You can at times see sea turtles, monk seals or some smaller fish on the sides near the rocks. Inside the resort, there is a kids activity center which runs daily arts/crafts events (example image above from dgf). There is a billiards room, which my son really loved daily. They also have a kids lounge where they show movies, have ping pong, puzzles and various board games. A quick walk along the walking path could go by the marina or down to Aulani, which is fun to walk through.
On Oahu, there are plenty of activities. Just depends on what activities you want and how far you want to drive. Last trip, we did the Dole Plantation. It was VERY touristy and we actually did not enjoy it. We also trekked up to Haleiwa to see the North Shore. Kids loved seeing the huge waves and surfers. Just note, we weren't comfortable with our kids getting in the water there....so they just watched...given the surf conditions were high. We took a picnic. Nearer to Honolulu is Waikiki beach, Ala Moana shopping, Pearl Harbor, Missouri, Haunama Bay (great for snorkeling with kids!, arrive early!), Diamond Head, Waikiki Zoo, etc.
When on a family budget, just staying at the resort and then traveling a few days to local beaches, seeing Pali lookout, hiking Diamond Head, walking Waikiki, seeing North Shore, etc....are all great options. Part of our fun in Hawaii is seeing the natural beauty in different spots of the island. If you want a slightly further trip, Oahu has the only green sand beach in Hawaii. Pretty neat, but it's a little bit of an adventure via car and walking. Check it out via Papakolea Beach.
Lastly, if the kids first time to Hawaii...I do suggest a luau. Ko Olina has a good one. Some luau's will provide a show only ticket (no dinner), to reduce cost. With a family of kids, this can be a good option given most kids don't eat their money's worth at the pricey luau.
Enjoy.