While it is definitely touristy and expensive, I think doing the Empire State Building is a great idea. Picking a time it isn't totally overrun is probably a good idea, just after lunch is a good time or first thing in the morning.
Overall, the best things for kids that age is to give them a time block to plan themselves or provide suggestions for and then doing a little subway navigation to get there. Splurge on getting a metro card to swipe in and have them figure out the route and lead the party.
I agree with that, it really gives you a sense of just how massive Manhattan is. The open air busses are good touristy things too.
I'd also be careful with doing too much in a day. Most people aren't used to the amount of walking you'd be doing.