How can I disable the Android Market temporarily?
In the Market settings you can add a PIN to protect purchases; that should lock them out effectively enough.  I don't know of anything offhand to prevent all installs, though.  I would assume you'd need to be rooted for an app to intercept and prevent install attempts.

If you are rooted, you could use something like Titanium Backup to back and uninstall the Market, then reinstall it when your kids are done.  That might be cumbersome as well though.