While I do not have kids, I can understand a bit of where you are coming from. Reduction in the quality of life and financial security from the loss of salary was a serious issue for me. No matter how much you get in scholarships, it's still not going to make up for the loss in salary so if you go FT...that is just a fact of the matter. I had applied and been accepted to FT programs or PT programs that would require me to commute back and forth (by plane) on the weekends to maintain my salary. My spouse and I concluded that going to law school would effectually ruin the next 3+ years for us because we would be so financially strapped, and we decided that we didn't want to do that (yes, shallow but we were totally honest with ourselves).
Then I got into a local PT program and we decided to give it a go. I don't have to move or quit my job, I work in government and my boss went to the same school so he is supportive, and we have a little more piece of mind. I will have to work twice as hard with half the time everyone else has and MY life will still suck, but at least we still have some financial security.
That said, if I were you, I would go through the application process and get into school. After seeing what your options are, I think your gut, and your wife's, will tell you what to do. Trust me, if I had gotten into Harvard (I'm at a T2), none of this would have been an issue. Find our what your choices REALLY are and then make a decision.