My experience with kids and packs, is that the pack fit is much more important. If they don't fit, its going to be tough to get them to want to carry them, and injuries are more likely. The thing is though that a lot of the packs now have a pretty good range of fit, and some even have swap-able harnesses. I'd get them fitted with a the biggest pack that can be adjusted down as far as it can go. This gives you growth spurt room to adjust as they grow. Depending on the kids, it can be a fresh fitting every trip (although really its important to do anyway) You should have enough of an idea by now of how much sprout is left. As far as the rest of the mil-surp gear, there is some good stuff to be found in the way of mess tins, camp sundries and the like. Sure other stuff might be lighter, but I'd rather go milsurp than walmart if I had to. If the boys want to really rough it, stuff like poncho/shelter halves can be a cool experience, but only if they want it.
All that being said, If you have access to milsurp gear, and are at all handy, you can custom out some bags that will straddle that line for them. Especially as they grow. Most mil stuff wasn't exactly sized for a wide range of people. So I'd expect some fitting to be required, but it could be done, and then it really is "their" pack.
I see more and more osprey packs around with the folks I work with, hard to beat that warranty, and the stories I've heard from guys of what actually killed their pack, well, lets say by the time the pack failed, it had already gone very wrong, and it was by far not the weak link in the chain.