We were planning a trip to Stockholm for the last of July/first of August but just found out about the gay pride festival that will take place in Stockholm during this time so now we are not sure what to do--change plans completely or still go and find a way to avoid all the stuff related to this festival. We are traveling with kids and have no desire to expose them to such things. Any suggestions on how to still see Stockholm while avoiding the crowd.
Unless things have changed, I believe that most of the events take place in Tantolunden (a park) on Södermalm and the largest crowds will be there. Södermalm is not a part of the city that most tourists visit; tourists tend to stick to Gamla Stan, Djurgården, and the area near Stadshuset on Kungsholmen. On one of the days, there is a huge parade which makes its way through the city. If you want to avoid the crowd, you could to take a day trip out of the city on parade day (perhaps visit an island in the archipelago, go to Drottningholm or visit Mariefred and Gripsholm Castle). You should be able to find a list of the Pride events and plan accordingly to avoid the crowds. My parents happened to visit me during the week of the Pride Festival when I lived in Stockholm. Had it not been for the rainbow flags all around the city and a large crowd of well-dressed men waiting outside a cinema in my neighborhood, I'm not sure they would have even known the event was occurring. They spent most of their time at tourist sights. Your children may not realize that they have been "exposed" to anything. They might just think that there are some large groups of very happy people, occasionally in colorful costumes. That was mostly my observation when I lived there. However, I understand that the festival is much larger in size now; I lived there from 1997 to 2000.