I would absolutely cut out breakfast and do protein bars, but my husband loves breakfast, especially when on vacation. So, we will probably doing a lot of sit down breakfasts
I love breakfast, too! Being a big breakfast eater is, IMO, another reason to pay OOP rather than use the DP. In general, breakfast food is less expensive than lunch or dinner, so when you redeem credits on the dining plan, you get more value if you use them for the more expensive meals.
The real sit-down breakfasts are at the table service restaurants, and won't be covered under the free dining (unless you're staying deluxe level; mods and values have QS plans). So, if you're thinking of doing them, you're either paying OOP anyway or paying to upgrade to the regular dining plan, and thus adding like $400 to your costs.
I think the point is just to realize that the DP only pays for 2 meals, so even if you go with the plan, it's best to think of ways to save on at least one meal. Eating a big breakfast can be a great way to save on lunch. You can have a filling breakfast and then just snack or eat a packed sandwich (really cheap to get deli meats and store in your hotel fridge or make PB&J) before having a regular-sized dinner.
I started to play around with menus and prices just to give you some examples.
Not sure where you're staying, but I pulled up the menu for Pop. The "Bounty Platter" comes with eggs, bacon, sausage, pancakes, breakfast potatoes, and a biscuit for $11.59. Get two of those if you've got really hungry adults, plus 3 kids breakfasts for $6.49 each (since you're okay cutting out breakfast for protein bars, I assume you don't need that much food), and that's a ton of food for a bit over $40. You can easily spend less if some of the rest of you don't need the biggest breakfasts on the menu.
Especially with sharing meals, you can make your lunch or dinner come out to around the same price. For example, kids chicken nugget meals come with 4 nuggets, and two small slides like a danimals yogurt (which are really small), a packet of baby carrots, apple slices, or a Go-Go squeez applesauce and cost around $7 and change ($7.19 at Pop, $7.49 at Colombia Harbor House in MK). But an adult portion comes with twice the nuggets (8 pieces) and an adult-sized side including fries as an option (Colombia Harbor House for $10.49) or two sides (Pop for $10.99), so two kids can get the same amount of food for about $2 less per kid. Now, I love those Go-Go squeez pouches, but I just bought a 12-pack for $5 at the grocery store, so no need to pay Disney prices for things I can throw into my checked luggage or have
Amazon deliver for free to my hotel.