Is it just the presence of the kids or are the kids moving around, making noises, or something. Just trying to figure out if the kids are raising the excitement/prey drive. if that is the case, one thought is not to have those 3 elements together (dog + other dogs + kids) until the dog is more mature and has more self control. I would ask the question to Robert in the AMA. I only seen protection increase over things that the dog is already suspicious of. But I only have had experience with my own dogs.
What I would try is get one of the dogs that she plays with and you know is a balanced dog and start from there. I would have your dog at a distance but close enough to observe and have your kids show affection towards the other dog then return to your dog then back again. (the other dog is on a leash) When they go back I would decrease the distance. Watch a vid on leash reactivity on how to begin to decrease the distance. She will probably do better with just one dog. Type in leash reactivity. There is one with I think is a GS Dakota, which is very good.