Those kids will grow fast and need lots of their own gear too. An Alps 80 liter doesn't sound like a lot of fun, but it's paid for. I would make do and keep any eye out for a deal. People unload big packs pretty cheap, especially in the fall and winter, which is coming up fast.
Hiking with kids usually means easier and shorter hikes, making is easier on Poppa Sherpa too. They don't need to get very far out in the woods to have it feel like a real adventure.
What I as in mind was a decent Osprey, REI or other 60-80 pack. A McHale or Dana would be great and there's nothing wrong with a good external frame.