Turn your kids loose on Kalahari's water park. They'll have fun, and it should be included in your room cost (at least it is at places like the Great Wolf, which is one of Kalahari's biggest competitors).
Monk's at the Wilderness is fairly close to the Kalahari, not a long drive and you'll miss the worst of the traffic. They have the best burgers in town, family-friendly. Highly recommended.
You could have a vacation without leaving the Kalahari, they work hard to make it a one-stop getaway. But you will pay somewhat for that convenience. The food is OK, not great, and more pricey than Monk's, for example.
Do NOT eat at Damon's, next door to the Kalahari. The food isn't even mediocre and it's expensive.
My wife and I have kicked around the idea of writing a "Local's Guide to Wisconsin Dells". If you have any other questions, just ask.
edit Are you looking for stuff to do during the day, or spending it with the in-laws? Noah's Ark is fun, but you'll spend a lot of $$ and stand in lines. With younger kids, I think the Kalahari's waterpark would be fine, they won't know the difference. +1 on the Duck suggestion. I still have my "driver's license" from when I got to steer one of those, when I must have been about 10.