We flew Icelandair out of Toronto. Icelandair was great, we had no problems at all. They had a "goodie bag" for each kid and a free meal on each flight. Layover in Keflavik isn't ideal when you just want to get to your destination, but for $2,600 for 4 people, I'll deal.
Amsterdam: Singel Residence, 1 night
Hotel was nice, airbnb style. We did the Van Gogh Museum, which has a nice scavenger hunt for the kids. We did a canal cruise with Friendship Amsterdam. I would highly recommend them. Smaller, open top boat. Served drinks. Captain and hostess did a wonderful job talking about the city.
Next day train to Bacharach
Bacharach: Hotel Kranenturm, 2 nights
Hotel and breakfast were nice, but unless you're a heavy sleeper, trains will wake you up at night. We arrived on a Thursday and town was a little sleepy. Restaurants and shops were closed around 7:00. Next day took KD Line to St Goar. Toured Castle Rheinfels which is very fun. Take the shuttle up if you can't do a STEEP walk.
Train to Rothenburg
Rothenburg: Pension Elke, 2 nights
Rothenburg was very nice. Did night watchman's tour and visited crime and punishment museum. Both were fun and well worth the money. Kids enjoyed them. It was not as crowded as I thought it was going to be.
Train to Munich
Munich: City Aparthotel Munich, 3 nights
Hotel was ok, not great. Close to a metro/tram stop. Had a washer and dryer and AC, which was nice because it was 95' when we were there. Augustiner Beergarden is GREAT!! Visited Marienplatz and Hofbrauhaus. We also went to the Nazi Documentation Center. We wanted to provide some history to our kids, we would have preferred Dachau, but looking into it, it was going to be too much for our kids. The NDC did a very good job of explaining the buildup of Nazism and its effects on Munich and Germany. If you have younger kids, I think it's a wonderful choice. They also had a children's audioguide. Munich also has many fountains that we let our kids play in at the end of the day since it was in the 90s. Drove to Andechs Monastery (a MUST)
Rented car from Europcar and drove to Hofen