Oh Hoofy, I am so sorry to hear that it was so bad
I gave up on Carnival after a crappy cruise 7 years ago, and won't return. That's why I was so pissed when Grazie switched to them from Princess. I hope you will let someone at V/P know just how terrible it was, as it reflects very poorly on them!
Honestly. I don't think taking kids to Vegas is such a bad thing as long as you have ideas for fun things for them to do, and it sounds like you have a great plan. If they have a great pool and a few activities, I bet they would love it. And if you take them to the Hoover Dam or out to see some of the beautiful scenery, it could also be educational. I see families in the Palazzo elevators all the time, and they usually looked relaxed and happy. I say GO FOR IT! You deserve it!