My opinion? Refinance the LS and keep it for a couple reasons:
1. My fiance's cousin's husband (thats a mouthful lol) has a brand new Rav 4 and their frends have a CRV. We just spent a week with them in Virginia. The little trucklets are nice but they don't have a lot of room at all, I would say the LS has at least as much or more room, my ES has more. The Rav has a lot of room with the seats down or out but not much at all with the seats up.
2. The LS is much safer. Check out the crash test ratings on the year Rav 4 and CRV you'd be looking at. Your family is going to be much more comfortable and more secure in the LS.
3. The LS is longer lasting. 99k is just getting started for the LS, you can expect at least another 99k out of it. The Rav 4 has Toyota quality, but they're not as robust as the Lexuses and definately not as robust as the LS.
I went from an Explorer to the ES, and we have 4 ferrets (they ride in a cage that takes up 3/4 of the backseat, and they require more junk than two kids, trust me! (my fiance and I have had many fights about this). Basically what we've had to do is learn to pack better. I'm 99% sure if you try the LS a couple times with the kids and try to pack as well as you can it'll be more than enough space. The main problem with that generation LS is its little trunk.