Safety trumps etiquette.
Former theme park worker here. OP, you mentioned that the kids had also escaped into an area they weren't supposed to be in. There's generally a reason for fencing, borders, gates, etc... it's very easy to get hurt or even killed near the machinery/equipment of a ride, whether a roller coaster or a carousel. For your own comfort and THEIR safety, yes, awkwardness aside, it would have been worth speaking up.
We all get it. Theme parks operate mainly in the summer. They are hot, sweaty, smelly, crowded places. That does NOT give anyone, adult or child, free reign to act like a wild animal. I have seen coworkers get severely injured (to the point of needing to be brought to a hospital) by guests who wouldn't control their behavior and act like civilized human beings. Kids will be kids and boys will be boys, but like everything else, there is a time and a place. If they are not old enough to behave for the duration of the wait time, they may not be old enough to go on the ride - even if they make the height requirements!