Okay, Badfish... I read your posts, but not many of the replies. Maybe some of this is just repeating what others have said.
I found myself in a situation very similar to yours, excepting that we were still "planning to have kids," rather than already having had them, and I knew that my situation at the time was not where I wanted to be stuck for life. When the telecom industry tanked in 2001, my wife and I (and thousands of other Lucent/Agere engineers) found ourselves without jobs, and I decided this could never happen to me again. I started shopping full-time masters programs, and actually found that if I was willing to enroll in a Ph.D. program, I could get a free ride.
Not really wanting to do the full Ph.D. at the time, but not wanting to PAY for school even more... I went for the Ph.D. Then, three years into the 5-year program, the company funding all of my research pulled the plug, although they did offer me a job... in Boston, where I could continue working on the Ph.D. Instead, I negotiated to transfer my dissertation credits over to master's thesis credits, and graduated with an MSEE (plus something like 36 extra credits toward a Ph.D. I'll never complete). I was then faced with the same task that worries you... explaining in job interviews why I hadn't been working the last three years, and even worse... why it took me THREE years to get a master's degree.
I found both items to be a complete non-issue. In fact, in every case, the interviewers were impressed that I had chosen to go back to school, and with the course- and lab-work I had completed during that time. Many had either similar stories of their own to tell, or expressed some desire to do the same for themselves.
More importantly, with my education and skill set / job experience, I have almost zero concern about staying employed. I interviewed with several companies after graduation, and received offers from every one of them. The company I chose actually had several rounds of layoffs shortly after I was hired, but since I brought something highly valued to the company, others were laid off in my place. If I do somehow lose my job down the road, I have no concern with finding another, since my area of study is in-demand, and so very few working in my field are schooled in my particular area of expertise.
All that said, it was very hard getting it done, and I imagine your road will be even harder. I did not have kids at the time, life's biggest factor in stuff like this. However, I always tell myself I can do ANYTHING, if there's an end in sight. Two years, three years... seems like a long time, looking forward. However, look back three years, and it seems like yesterday. You can do it, if you know it's just a couple years. Just keep the end in sight, and make sure your work is moving you toward that end... as quickly as possible. I disagree with the notion of taking a partial load... just get it done.