Florence, 2 nts (Uffizi, gelato making class)

2 nights is just 1 full day- you will probably want 3 nights here unless you plan to do both Ufizzi and gelato class on same day.

You will need 2 cars for 8 people. All drivers must have an IDP

I would choose Option 2- no need to go all the way to SML
I would probably just keep the cars from Florence til you are done at Lake Garda- might cut back on some nights there, choose just 1 location,

I would give an extra night to Florence and another night to Rome.
Venice should get at least 2 nights- that is really only 1 full day. If you only give it 1 night you only have that evening in Venice. (look into Row Venice)

Make sure you figure out how you will get to VCE for your departure flight. If it's an early morning flight it is more complicated, not impossible just more complicated. There are several threads here addressing transportation in Venice.

I'd flip the itinerary, and fly into Venice and out of Rome. It's difficult to get to an early morning flight out of Venice. In addition, Venice is great for walking off jet lag, and getting accustomed to Italy. I'd really advise three full days, at least, in Venice. And- the boys would love Row Venice, family rowing lessons on the back canals, 90 minutes, about 100 euros each group. Rowing is harder than it looks, and the kids can compete and see who masters the skills first. We always stay in the Cannaregio area of Venice, where there are no crowds, yet a nice energy, and a ten minute walk to a vaporetto stop on the Grand Canal.
Spend at least three nights in any stop. Checking out of hotels, traveling about, and then checking in takes a lot of time with a group your size. Slow down and actually BE in a location.
Sounds like a very special family trip!

Coordinating eight people over 14-21 days and two cars will challenge the bravest. If you have a choice of between 14 and 21 days please stay at least three nights in each destination. Each change pf location will take half a day. One full day of activities together and one full day of activities selected by each group ( or AM/PM mix and match) will build in a valuable flexibility. Give the preteens/teens a chance to select activities to explore. Just being there will be their biggest memory. Give the adults some downtime for a leisurely coffee on a piazza. THAT;s what's best about Italy!

Don't forget jetlag when you get to Rome. Not sure if you have red eye or day time flights but 9 hours difference is significant.

I'd add at least one or 2 more days in Rome. Day one to work off jetlag (let the kids sleep until when ever, then spend the day walking around and finding a great gelato) . We did both the Colosseum/Palatine Hill/Roman Forum and the Vatican early in the morning (8am and 8:30) and it was worth the early mornings! We are here in mid September and by the time we were done with both crowds were starting to get overwhelming. I can't even imagine with the heat in July. It's been mid 80's and the humidity is what gets you. Basically sweaty the whole time.

Another quick fun stop we did on our way to Rome from Switzerland was Brescia. It's an overlooked city with a great old town. Lots of restaurants and shops. We stopped there specifically for the arms and armor museum. Perfect for our 12 and 13 year old boys. It isn't the largest museum (and hour or 2 tops) but part of a whole set of museums in the city that really are high quality. Everything was in Italian and English. There are Roman ruins and the history museum was really top notch. They have a huge collection. I'd say more in depth than the Vatican museum. Even if the kids don't read everything the collections are so vast and nicely displayed it was engaging for our boys. When we went there were virtually no crowds. Most of the museums we were in rooms by ourselves and only passed other people occasionally. I am sure it is more crowded in the summer but probably nothing compared to Rome. Just make sure you stay in the old town and everything is walkable.

Thank you for the advice. Yes, I think it's clear we should eliminate the coast and focus on Rome, Florence, Tuscany villa, and Lake Garda. We already have a direct red eye flight into Rome, arriving around noon, but haven't booked our outbound flight yet, I'm looking at options. Any input on flying out of Milan, Verona or Venice?
I have been to Venice, albeit it was a short stop on an Italian bus tour 20 years ago, and it was so hot and crowded it felt like Disneyland to me. I don't have fond memories of it. I would be ok with skipping it and flying out of another location, just because late July in Venice doesn't sound all that enjoyable. It also looks like most flights are quite early, and several posters mentioned that being difficult. Or if we do fly out of Venice, please tell me your secrets of what to do/see and avoid crowds! And any airport advice? Do people ever stay at a hotel at the airport the night before?
I also appreciate the advice on handling a group this size. We will all be together at the villa in Tuscany, but at the other stops we will likely spend more time apart as individual families and get together for a few activities/dinners. I know I can't handle shepherding 8 people through crowded tourist spots! And yes, we would rent 2 separate cars.