Southern France in July !

1) Is it a bad idea , because it will be hot at that time of year

Only you can answer that question, since you know how you deal with weather.
I am from Chicago and I went to this area in late July with my sister who is from Tampa and it didn't bother us.

2) What would be your must see

I'd stay in Nimes and you can visit Pont du Gard, Arles (take to train from Nimes), Avignon (take the train from Nimes) and the Luberon Villages since you are renting a car and then on the way to Marseilles which is west of Nimes you can visit Carmague, Mont Ventoux, Écrins mountains, Gorge du Verdon.

Moissac, Cordes-sur-Ciel, Saint-Guilhem-le-Désert, Sétè, Montpellier historic center, the beaches along the Herault coasts.

Yes, it's hot. Start early. Go out again around 4 pm. Stay in the shade. Cover your heads. Hydrate and you'll be fine.

Your Toulouse/Marseille option sounds good.

I liked Toulouse itself very much. The architecture is distinctive, and the city has some nice sights. However, you have a lot on your plate already with this trip, so you may not be able to spare the time.

OO! You will be near the Tour de France time!

I doubt it will affect you much, but it looks like they will be ending in Nimes on the 16th, just to keep an eye out.....

Your option Toulouse → Marseille sounds good to me too.

As for the weather, yes it is hot, even very hot during the day.
That being said, I took people to visit Toulouse and its surroundings twice last year in August with temperatures between 95F and 105F, they were not only delighted but still alive at the end of the trip. :-))

Having a car allows you to discover places little known to tourists (I can give you some tips) but you will not need it on the days you stay in town in Toulouse.

About places to avoid apart from Nimes on July 16 due to the Tour de France there is also Carcassonne with one of the largest fireworks displays in France on July 14 "Bastille day" in the medieval city. (700,000 spectators on average)

It's pure hell to get there and leave by car. All the surrounding areas including motorway rest areas 4 kilometers far away are crowded from the morning

https://www.youtube.com/watch?v=xPHf6P72gDI&ab_channel=VINCIAutoroutes

Thanks to all !

Toulouse-Marseille could be a good idea...but maybe it's too much for 22-24 nights ? We have a hard time figuring waht could worth that road (beside Toulouse itself) and maybe Caracassonne.

Narbonne and Montpellier are worth visiting. Slightly off the highway is the craft town of Pezenas.

I didn't fine Sete all that special, but I know others have made positive comments about it.

Don't miss the lavender fields in bloom in early July! Should be on everyone's bucket list.

Visiting the main part of Toulouse can be done in 2 full days without stressing.

Albi and its cathedral can be a daytrip destination by car or train. (1 hour from Toulouse)

https://www.albi-tourisme.fr/en/

In an opposite style, in Toulouse, if you are a fan of mechanical giants, with your kids go to the "Halle de la Machine" which is an old aerodrome converted into.... See here:

https://www.youtube.com/watch?v=UgY9ku1c79k

http://www.halledelamachine.fr/en/1203-2/

There are plenty of itineraries and stops possible from Toulouse to Marseille. It's impossible to list them all.
It depends of your preferences, sea, beaches, fishing ports, mountains, countryside, big cities, medieval villages, national parks.

In July if you go along the coast via Narbonne, Béziers, Sète, I warn you that it will be extremely crowded with tourists from the Spanish border to Montpellier (and beyond). Traffic can also be very busy on weekends.

There are quieter itineraries (without the sea) via Castres, the "Haut Languedoc" or "Grands Causses" Regional Parcs

https://www.tourisme-tarn.com/uk/discover-the-tarn/areas/haut-languedoc-regional-nature-park/

And villages like Olargues

https://www.minervois-caroux.com/en/see-do/our-villages/olargues-villages-en.html

And many other places. See interactive map at the bottom of this page:

http://tinyurl.com/mhbxac2k