I'd be really cautious with kids that age...even if they're wading, make sure there are adults who are interacting with them (so they're paying attention and right with them).
The river is fairly wide there, so not moving at full speed, but it's deceptive, and there are many snags and faster parts just downstream as it joins Tenaya Creek.
As others already told you, it's mighty cold...
http://www.pbase.com/roberthouse/image/61298406(note the comment underneath), while that was upstream, the temperature isn't much different.
If you cross the old wooden bridge at the back of the (North Pines) campground, you might find a beach of sorts on Tenaya Creek
http://www.pbase.com/roberthouse/image/1602828 but again, watch them closely, as "creek" doesn't really describe it.
There is a somewhat safer sandy beach near the swinging bridge (Southside drive across from Yosemite Lodge, near the chapel), but with the hot weather the water flow may be up significantly, so it may be covered up.
Just be careful; despite it's name, the Merced shows no mercy.
Gary
Yosemite Photo Galleries: http://www.pbase.com/roberthouse/yo