Mosel town or village on train line?

Cochem. You can pick a place to stay that isn't directly on the main strip. I stayed in a b&b up the hill road a short distance and this was ideal as our street was away from the hordes, but a short walk to everything. The other towns just don't have the resources (you'd have to go to Cochem for rental bikes and more restaurant options anyway)

Given your requirements, Cochem would be the best, although it is my least favorite town on the Moselle River with MANY tourists.

I agree Cochem is best. It fits all their desires and so many day trips easily done - including Burg Eltz.

Cochem is quite small, actually, and while it's a tour bus stop, it's less busy on the weekdays. It's a good spot for families. Burg Eltz may or may not be a bit of trouble to reach with 6-year-olds... Reichsburg Castle is on a mini-mountain right in town and should not be dismissed even though it's a more recent reconstruction; a shuttle from the town center gets you up there if the walk seems too daunting. You may also enjoy a short river cruise there (1 hr. to Beilstein.) A waterpark (Moselbad, Freizeitzentrum Cochem) is across the river and down stream from the old town, near the more modern bridge. (It's a good place for small kids too.) Also nearby (in Klotten) is a popular amusement park with an animal component, including a "birds of prey" show.

We stayed at the Hotel Schloss Zell, in Zell an der Mosel. There is a train station (we were coming from Paris) a 5-minute cab ride away. We thought it was beautiful, as it’s on a big bend of the river. The hotel is a baby Schloss but a castle nonetheless. When we arrived, they gave us a complimentary drink on their vine-covered terrace, which was so wonderful we just stayed there for an excellent dinner. We were only there overnight but had a lovely 2-story family room (loft for kids above, bedroom below). I didn’t look for a bike rental place, but I recommend this town highly. Good connections by train to other towns, somewhat fewer tourists, and just really pretty.

In 2008, I decided to visit the Mosel. At first I tried to get accommodations in Cochem, but every place I wrote to in Cochem came back with "Leider, wir sind ausgebucht". So I looked outside of Cochem. I finally found in a Privatzimmer, here, in Treis-Karden. It was an excellent choice, not only a nice place to stay and reasonably priced, but the host is Dutch, and works for an American company and speaks excellent English. He can help you with any arrangements you need to make. I don't think all those places were actually booked. It was a big weekend, "Federweiß" (festival of new wine), and they didn't want to rent their double rooms to only one person. When I got there, there were "Zimmer frei" signs all over town. Apparently it didn't turn out as popular as they had hoped.

Anyway, unlike the Rhein, which is a fairly straight shot and there are rail lines along both banks, the Mosel is fairly windy, and there is only one rail line, which stays mainly against the big loops on the left bank, so many places (Bernkastel Kues, Zell, Beilstein) can only be reached by bus from the main rail stations. But Cochem, Treis-Karden, and Moselkern (starting point for Burg Eltz) are all on the main rail line. It's 8 or 9 minutes from Karden station to Cochem.

If you want to go to Burg Eltz, but don't want to hike through the woods, there are buses on weekend starting in Treis and going through Moselanlage and Hatzenport to the burg, but they are "Ruf buses" (or Busse), they run a set route and schedule but only on request. Herr Löhr could help you arrange for this bus.

You already have good advice, but our daytrips suggested that Traben-Trarbach might suit your needs. They are very attractive and one has a train station.

Thank you for your thoughts and recommendations. I will share this with my daughter-in-law who will make the actual choice. I did check the Schloss Hotel Zell and it actually is quite affordable, as well as attractive.

The boys are very active (they ski and mountain bike as well as hike) and will have no trouble with the walk up to Burg Eltz if they decide to do that. She said they will skip the water park because they can do that in the US. Cycling is the main goal here, so I will check out bike rental options in Chechen and elsewhere to make sure they have child-size bikes, or the ones that attach to an adult bike.