I think if you paid for the express passes you could probably do it, but you'd be rushed and wouldn't get to just sit back and enjoy the beautiful scenery of Islands. My biggest complaint with islands is that there just isn't enough for kids. Even some of the stuff in seuss landing is a little intense. The cat in the hat ride has a lot of spinning and while some kids like that, I know many who wouldn't. Almost everything else in the park has big drops that some kids won't like, scary, or a little on the intense side such as the coasters, spiderman, etc... I didn't get to see the sinbad show or poseidon's fury though so I'm not sure how they are.
If your kids can handle those things and you don't want to pop for the express pass in addition to their park hopper extra fee I'd do IOA. To me it is the only Universal park that really measures up to Disney and in some cases surpasses Disney. The theming is beautiful and there were areas that we just sat and looked around because the layout and audio were beautiful.
Just be careful because the little ones may not have enough to do. For the real little ones you'd probably be relegated to Seuss landing, popeye, the pteranadon flyers, and the shows. Everything else may be too intense for them. That park does have a lot better food, scenery to just sit and look at, and shade. The studios has very little shade, IOA has a lot of it which is nice.
By the way, I've started my trip report on the WDW board since it started there. I'll probably just leave the whole report there. You can find it here if you're interested in our pictures of the parks:
http://www.micechat.com/forums/showthread.php?t=36235
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