The dining table definitely only seats 5-6. We put 7 people (3 of which were kids <5) in a 2 br and we could not all sit at the table at the same time.
Price-wise, I think you would come out way ahead by splitting the cost of a 2 bedroom versus two separate rooms.
I think whether it would be fun or not totally depends on what you consider fun! Personally, I would look at two separate rooms if it were financially feasible. Part of my opinion is that I like my own space and if traveling with another family, I would want to be able to break from them occasionally rather than be together 24/7. The other part for me is that is a lot of people in the room. It is spacious and totally possible to do if you don't mind having stuff everywhere and people sleeping in the living room. Clutter/disorganization stresses me out so I know I would not be able to enjoy my vacation as much. To help on space, have everyone unpack suitcases and then the beds are designed to store suitcases underneath. Also would need to make the pull-out beds every morning so you had places to sit. The biggest clutter point will be the kitchen as there just isn't much cabinet space, so most of our food sat out on the counter. If you are in a dedicated 2-br, you get an extra half bath, which could help as well.
Two other things to note:
1) If you are in a dedicated 2-br, the configuration will be one room with 2 queens, a master bedroom with a king size bed, and then three sleep in the living room (pull out couch + chair). As you are the family of 4, it seems logical you have the room with 2 queens. I have to say the Master bedroom is much more spacious and bathroom larger.
2) If you look to price out a standard room just be aware of the extra adult charge if your teen is 18+. From Aulani's website: (for parties where there are more than 2 adults in a Standard Room, an additional fee of $100 per adult/per night + tax will be applied to the 3rd and 4th adult occupying the room. The additional adult fee does not apply to suites or villas) and the other family has to book at least a 1 br villa.