The cost at DB for 3 adult 1st-class passes @ €380 = €1140 = $1355. I believe most other vendors are charging over $1400 right now. So $1200 looks like an underestimation unless I'm missing something.
"I didn’t feel like being concerned whether or not I would have a seat.. I guess thats kind of why the first class route sounded as the way to go."
The way to ensure you have a seat is to purchase seat reservations (still €4.50 I think.)
Plan B:
Three adult passengers using 7-day 2nd-class flexi-passes... two travel on one 2nd class German Rail twin pass (€416, 2nd class) and one travels on his/her own 2nd class pass (€280) for a total of €696 (not including reservations)
"Dont know if we could save much money using regional trains..."
(FYI two of your seven journeys - the one to Nuremberg and the one to Füssen - will include regional trains as part of the journey in addition to long-distance trains - the rail pass doesn't make long-distance trains available on local train routes.)
Plan C:
Three of your seven journeys are normally done by regional trains only. Costs for 3 adults by trip:
From FRA to Bacharach: €35 (RMV group day pass fare)
Füssen to Munich: €37 (Bavaria Ticket)
From Munich to Salzburg to Munich by regional train: €37 (Bavaria Ticket)
If you have 2nd class flexi-passes for the other 4 journeys...
1 twin pass for two = €314/ 4 days
1 adult pass for one = €215 / 4 days
Plan C total train expenses = €638 (not including reservations)
Seat reservation expenses, if you all reserve every possible long-distance train trip... 3 persons x €4.50/pp/day x 4 days = €54.
So... to sum it up...
It's $1355 with your 7-day, 1st-class passes (no seat reservations.)
It's €750 total with plan B (7-day 2nd-class passes + reservations) = $892
It's €692 total with Plan C (4-day 2nd-class passes + reservations + day passes for regional-train-only journeys) = $823