Immigrating to the UK from France/USA

I am a UK citizen (through my dad, who was born in England), born in France, currently living in the US (I have US citizenship through my mother, and was naturalized French at 16), married to a French/Swedish citizen (dual citizenship), with 2 kids (aged 16 and 13), both born in France, both dual French/US citizens.

We have decided we want to move to the UK in about 18 months.

My understanding is that the kids are eligible to register for UK citizenship (form MN1):

• Is that correct?
• If I'm registering my kids, am I the "applicant", or are they "child applicants"? That matters because in the section discussing referees, it says that child applicants must provide referees that have worked with them in a professional capacity. That would be a problem for us, because my kids have never lived in the UK and as such, have never had a teacher or doctor in the UK who could act as a referee. If I'm the applicant, then it should be fine, as I have a referee (the "professional person" friend I used for my own passport application) and should have no problem finding another referee as I have several friends who have known me since the time I lived in the UK as a child.
• What kinds of documents can I need to provide to prove that I lived in the UK as a child? I was there for 4 years, from 1986 to 1990, and I will try contacting the schools I went to for school records. Are there records of border crossings that would show when I entered the UK? I'm not sure exactly when I first went to school in the UK, it probably wasn't until 1987... Anything else that could be used?
• It says that I will need to send in my passport (UK, presumably), but it also says that I can't make a single application for both, they need their own individual applications. Does that mean I can't do them simultaneously, since I will have to send original documents?
• This process can take up to 6 months, and I then will have to apply for their passports as well, correct? So since we're planning on moving in 18 months, we'd better get started soon...

As for my wife, am I correct in understanding that she would need to get a family visa, and then apply for an ILR after living in the UK for a few years? Any suggestion regarding timing? I don't want to leave it to the last minute, but I also don't want to do it too early, because I assume that once she gets her immigration visa approved, she will be expected to move within a narrow time frame, correct? Meaning that it's probably too early to apply at this point...