Dear Gooner,
I have been thinking about your post, even before you pm'd me. I regret to say that in my opinion, Marrakesh is not a suitable holiday destination for you and your family given the details you have passed on.
There are I consider good reasons behind this:
Firstly Marrakesh will be VERY hot at the end of August around 38-40° C, and there is not a lot of shade. It is after all close to the Atlas mountains and the Sahara Desert! Yes, many of the 'posh' and tourist hotels have swimming pools, but it really would be too hot for your little ones.
Secondly, Marrakesh is a working town, with all the hustle and bustle that that implies ... especially the hustle! There is a lot of noise, and everyone seems to have forgotten the 'rules' of the road! Your children might be very frightened by this and will certainly be upset by the condition of horses, donkeys and mules that are used as forms of goods transport and are treated roughly.
The ruins, ancient buildings and the souks (markets) will hold no interest for your children.
The journey to Agadir is a long 4 hours - and both there and in Marrakesh you risk finding parking a problem. A lot of 'parkings' are supervised by locals for a fee (how good are you at bargaining in Arabic or French?). There are often road blocks (legit ones sometimes too!) where you will have your documents thoroughly inspected - possible problems if you don't have an international driving licence or a photographic license - and may have to pay a 'fee' to continue your journey uneventfully.
If you REALLY want to go to Morocco, I would suggest that you look for a reliable tour operator offering Agadir as a seaside hotel base (with hopefully a children's playground on site, and/or activities for youngsters), and take a day trip or a 2 day trip to Marrakesh. You'll get more from it like that.
Hygiene levels in Morocco vary tremendously. I don't usually have any problems with the rear end ... but I certainly picked up something in Morocco that spoilt a lot of my holiday and took some time and hefty meds to sort out once I was home. You would have to be ULTRA careful with your little ones.
I am not decrying Marrakesh as a holiday destination, and hope to return there very soon myself. But I do consider it as really an Adult destination, and preferably well-travelled adults at that.
I think it has little if any appeal to children of the age of yours - and although I took my son travelling when he was even younger than your littlest, I don't think that the health risks that Morocco proposes to little ones are worth taking.
I am really sorry if you think that I am being negative - but let another 10 years go by and they'll really enjoy the North African experience and its colour and tumult much more.
If you really want to go to North Africa, you should find that Tunisia has a far better developed infrastructure for young travellers.
Kind regards,
Alsa