Bienvenue à la Belle Province!
Montreal is a fantastic city, but the 20% of Quebec's population who speak English live there, so it won't be as good for immersion. It is a great city, to maybe introduce yourselves to Quebec, and the tourist office in downtown Montreal has lots of information about all of Quebec. They might be better able to give advice about kid-friendly spots. If your kids are into hiking and nature-based fun, then there's lots to see for sure!
Quebec City is a must-see! And well, it's touristy so you'll hear English, but you're more likely to be able to practice your French with the locals as they're less likely to be bilingual. If you want slightly more immersion, book yourselves a hotel in Lévis, which is located across the river. My family who lives there can't speak a word of English! For kids: museums, the changing of the guard at the Citadelle, free tour of the Parliament, fireworks in Montmorency (just outside Quebec City, also home to a huge waterfall) in July and August, and I'm pretty sure there is a cool water-park not too far away for those hot afternoons. There are loads of accommodations in and around Quebec City, so you should be able to find something in your price range.
For more of an immersion experience, try a road trip along the scenic Rive Nord (north Shore), including Ste-Anne-du-Beaupré (check out the canyon and waterfalls!) and Saint Siméon and Tadoussac, all lovely and cute towns with very little English spoken! From Saint Siméon and Tadoussac, there is fishing and whale watching and heaps of hiking and gorgeous scenery.
Or, try the south shore and head along to Rivère du Loup, Rimouski, and then onto la Gaspésie (the Gaspé region). Once you get to the tip of Gaspé, there is Forillon National Park, as well as the towns of Gaspé and Percé, from which you can go whale watching, boat tours, etc, and there's lots of hiking and swimming nearby. (Or, drive both shores and take a ferry across the river!)
If you don't want to drive quite that far, try the Tremblant region north of Montreal. More heavily populated, it is full of cute villages, beautiful lake scenery and excellent hiking. St-Sauveur has waterslides for the kids!
I hope that helps! Et bon séjour dans notre belle province!
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