Found out my GFs kids are shutter bugs.

Looking for an indestructable camera for the 7 year old. Trying to keep it under $100. Some how anything worth value ends up damaged or lost when he is at dads house.

12 year old LOVED my T3i, I can see her picking it up as a serious hobby. So I am thinking another DSLR. The problem is, I am trying to keep it under $400. Maybe a T5i? Something else?

7 year old: used/refurbished rugged point and shoot:  Panasonic/casio/olympus, etc.

12 year old: used/refurbished D90 or D7000.  The canon equivalent would be a 50D.

I previously had a Nikon D90 and it was a great camera. I currently have a D7000 and so far I like it. So second the advice for the 12 year old.

For a 12 y/o a D7000 I think would be too much. I think something along the lines of a D3xxx or its Canon equivalent, is more than adequate.
The D7xxx series is a bit heavy, and to me a bit too complex for a beginner, same for the D5xxx series. Personally  I would get one of those better P&S cameras with adjustable shutter & f-stops. You want to encourage the kid to take the camera with them wherever they go with something they can just put in their book bags.  And if they drop it in the lake, pond etc, it would not be a big deal.
btw those smartphone cameras are pretty darn good

Why nikon over canon? I ended up going with canon due to a buddy of mine shooting canon, and Im thinking about getting her a canon so if she has any questions I can try answering them.

You could pick up a used d5100 body for $175-200 ish and get a refurb kit lens 18-55mm for $70-100.  So under $300 for a nice setup with plenty of features.

The major overall factor is the lens lineup which varies based on use.  But I generally tend to prefer Nikon Dslr hardware (capabilities/design) to Canon's (especially the lower end Canon Dslr's)

Also I don't want canon to become too big/have too much marketshare. They are the default option for point and shoot cameras.  Too many people just choose canon Dslr's based off that factor alone rather than taking a good objective look at all the cameras for their intended use.

To me at this end of the market, there are not a whole of differences. I personally stuck with Nikon because that is what I start out with, but Canon is just as good. But when you get to the top end, Nikon & Canon will slug it out.

Personally, as I said earlier, I would get a kid a cheap camera based on the fact thatt it may get dropped etc, and light so that they can carry it around. The newer smartphone cameras are quite good, will easily rival many low end P&S camera, and tread on the low-priced DSLRs.

Don't sweat the brand.  Get whichever works for you, and her.  Weight may be a problem, but I think a DSLR will be fine for a 12 y/o.

I started with an Agfa solinette.  My father bought it when he was stationed in Germany, in the early 1950's, and gave it to me when I was 13 y/o (that was 1970).  Totally manual, of course.  The only way to set the focus was to measure or guess the distance to the subject.  The was no light meter so you didn't (couldn't) set the "ASA" in the camera. You then picked the aperture or shutter speed, and calculated the other by doing a "sunny 16" calculation in your head. Then you cocked the shutter, and snapped a picture.  When the roll was full, it was off to our B&W darkroom in the spare bedroom.  My father let me (encouraged me to) develop and print the film by myself.

The point I'm getting at, is that everyone had to start with a manual camera back then (up to say, the 1960's), because that's all there was.  And everyone who was interested in photography learned how to do it.  It's not that hard, and I think 12 y/o is a great age to start.  I would definitely encourage her to learn the technical side of photography (exposure triangle, etc) early on, and digital cameras make that so much easier than film cameras, because of the instant feedback.  

Good on you, for getting them started young!