I have no reason to believe that this hotel's reviews and grades on Trip Advisor are "funny." I have several times in the past posted on Trip Advisor a restaurant review, and there was no alteration in what I wrote or what my grades were.
I find Trip Advisor hotel reviews to be grossly accurate--that is, hotels where the excellent grades are several times greater than the good grades are normally very good properties. Here, the ratio of excellent to good grades is an extraordinary 40 to 1.
And google Rick Steves Forums and Hotel Agnes, and see what has been said about the hotel on the RS forums. The comments are universally glowing (and there is a review above from TravelBug79). Again, I have reservations at the Hotel Agnes (and had them in October for a trip I had to cancel) and look forward to staying there.
There are surely a number of great hotels in Prague. If modern design and a bakery next to the hotel are huge factors for your family, go for it. My impression is that the Hotel Agnes is not the Ritz in Paris or the Goring in London--it is not a five-star hotel. With its physical facilities, it may barely be a four-star property. But based on what I have read, it offers six-star service. What other hotels at its rates pick up guests free of charge from the airport and train station?