Thank you everyone, all of this information is really helpful and gives us a lot of good options.
I should've better described what I mean by "small and quaint". Probably what I better mean is something that is picturesque and scenic to walk around, isn't a modern city full of skyscrapers (we live in Chicago), is of a reasonable size that it is easily navigable on foot. A town or city where we can do something like a "self guided walking tour of _____" and spend a couple hours following the route, or just wandering on our own past some of the sights (a formal published tour is NOT necessary, but I do like following Ricks' self-guided walking tours, and know other vendors provide things like that too). A half-timbered town would be fantastic. Or a town with a castle or fort. Or just something unique to look at - we'll be with our teenage sons and they like having a destination, even if it's just a cafe with a famous/local food item. I think a town like Heidelberg provides both "scenic" and "something to do". And I was wondering if Heidelberg is our best option, or if there are other options out there to consider. But I didn't really explain that well. (It's hard to know how the feedback will go sometimes, and I don't want to write too much at first!)
You've all given us some fantastic options. I'm going to take some time to look at the train journeys to/from each of these places, plus the things to do within them, and make a decision.
To address a couple other questions -
We will be spending the full day prior in Munich, probably leaving around 5 pm. So wherever we stay, we will ONLY have the next morning. We are generally early-to-bed, early-to-rise, so we would get breakfast early, and likely have around ~3 hours for sightseeing in the morning before we need to leave. It would definitely be a quick look wherever we are, and I know we likely will not see "everything" there is to see. That is OK. I'm just looking for a place that will feel like we are still on vacation, seeing something memorable and interesting our last morning. I don't want to "waste" that last morning.
Wherever we stay, we would stay within the Old Town or scenic area, to make the morning sightseeing easy. I'd also look for a hotel that ideally has a 12p checkout, so we could likely leave our bags in our room, go sightseeing, return, grab our bags, and head towards the airport around noon (or whenever). Or at least a place that could hold our bags at the front desk while we sightsee.
As for my anxiety - I usually feel OK when I know I have a good Plan B available, which is why we decided to head closer to Frankfurt the night prior. The trains from any of these cities you all suggested seem frequent enough, and even if we miss the scheduled connection, it seems the next train should come along soon enough - or we grab an Uber and pay. I don't want to stay anywhere that requires numerous train changes, but all the options suggested seem reasonable, and I'll be able to relax and enjoy the morning. (Although direct connections to Frankfurt are more appealing than changing trains.)
We are very light packers and plan to travel with just a backpack each, which will make it easy to be nimble at the train stations, and should make us better able to move quickly if we need to.
This was a long reply. All this to say, you've all been super helpful with your suggestions and given us some really good options. THank you.