Itinerary Recommendations

Hello tcatgm, and welcome to the forum. I don't think your plan is too ambitious, especially not if you really want to see some of the southern and south-western parts of the country. It will require long traveling times though and it's quite relaxed to pick only 1 or 2 towns for your overnight stays. Please check the timetable, enter your trips and decide whether that's acceptable to you and your family. If you prefer enjoying the Alps by hiking and by being outside, you could concentrate on Zurich, Lucerne and the Interlaken region instead (you could even make a day trip from Interlaken to Zermatt and back). Generally, mountain trains and cable cars are true attractions for children. Consider the Traffic museum in Lucerne as a bad weather alternative; it's really fun for children too.

The question which rail pass is best, is a bit hard to answer as long as you haven't finalized your plans. If you plan to travel to Montreux and Zermatt, I think you should consider a Swiss Saver Pass or a Swiss Saver Flexi Pass. The Swiss Pass offers lots of freedom and allows you to keep your schedule flexible: you can travel wherever you like, whenever you like. If you end up making shorter trips only, the Swiss Half Fare Card would be a good option. These general guidelines and calculation tips can help you out as well.