Two hotels in one week is a bit much in my opinion as you effectively lose a day checking out of one and waiting to check into the other and with two very young children it just seems more hassle than it's worth.
Are you renting a car? If not how are you planning to visit Santanyi? Be aware that the market in Santanyi is VERY popular, you will need to keep a very close eye on the children as even I've managed to lose my wife and kids every time we go (and not on purpose!). If you're driving there then be mindful that the roads surrounding the market are closed off and the remaining roads in the old town are predominantly one way and quite narrow. Most people park in the streets outside the old town and walk in. I enjoy the market, it has a lot of craft and fashion items however I go mainly for the fresh produce particularly the cheese and charcuterie.
If you want to visit Soller then I thoroughly recommend the old wooden train that travels through the mountains between Palma and Soller. Once in Soller you can take the old wooden tram down to Port Soller. Deia is very quiet, it's a small, sleepy village with not much to do, I can't imagine spending an afternoon there with young children. It may be preferable to spend time in nearby Valldemossa instead which is livelier and has more restaurants, shops etc. You can visit all three villages via bus however I always drive.
Be mindful that Es Trenc is very popular, especially on the weekend when it seems like every Mallorcan on the island is visiting. Parking is quite limited so people will park along the roadside leading up to the beach which means that if you get there beyond mid morning you'll have a lengthy trek along the road to reach the beach. If you're planning on going then make it midweek and get there early. It is a lovely beach however and worth the effort in visiting, it's also a great beach for young children as the water is fairly shallow and calm for some distance but be aware that there are no real facilities there as it's part of a nature reserve.
I've never chartered a boat so I can't offer any advice in that respect.
I've never been to Illetas as it's a bit too close to Magaluf for my liking. Magaluf is the only part of the island that I have no desire to visit, it's a mecca for young Brits interested only in drinking, partying and throwing up. Cala D'or however is very different. It's still completely geared towards tourists but has a quieter feel compared to Magaluf. There are lots of restaurants and shops to browse during the evening.
As much as I like Palma I don't feel that it is somewhere that your children will appreciate at their age. It has some great sights but they'll be wasted on children so young. I would be inclined to spend the whole week in Cala D'or and take day trips as and when. It'll be hot in July and traipsing around a city is not enjoyable so being in or near water is preferable.
