Our drive with kids

We did the drive in Sep 08 with our 9yr old and 6yr old; they entertained themselves in the car and enjoyed the stops.
Schedule your stops to be at places with stuff your kids will enjoy.
We payed the extra money to stay in hotels with pools; it worked brilliantly for placating the youngsters and did wonders for aching bones from sitting too long.
Our first stop for family fun was the surreal concrete sculpture gardens of sir edward just outside xilitla in northern Mexico. In the same general area is a boat tour to the base of a waterfall and into a cave for swimming in the somewhat glowing waters, as well as a bat cave.
After crossing into Guatemala we spent a day each at the water park and the amusement park. I loved the water park, lines were nonexistent on a weekday, and my wife said the rollercoaster in the amusement park was the most intense she had ever been on. Be sure to check which days of the week they are open.
We then did a spur-of-the-moment boat tour on lake Atitlan, it was just our family in a simple little boat for about an hour ($30).
After that it was the drive through zoo near the guate-honduras border. It's the real deal, a giraffe nearly stepped on our car and we have teeth marks from the lions on our bumber (be sure to heed the sign that says to roll up your windows).
The kids spent most of the actual driving time entertaining themselves in the car with books, games, music, etc. and only once really got excited about the view when we saw lava flowing down a volcan.
We'd been to Costa Rica a few times already and the kids were ready to feel settled so we came to a concensus and decided to "bomb it" to Panama. So from Honduras on it was like a game to see how quick we could get through the borders.
For borders, only twice did the wife and kids have to get out of the car for an agent to stamp their passports. Bring snacks and and cold drinks and some patience and you'll all be fine.
I would have preferred to see old ruins, hike mountains, and look for good waves; but, having pleasant company and giving them a fun experience was essential to me enjoying the ride. So, I adjusted my priorities for the trip and had a great time.
They all decided it was worth it to do it once; now, they all want to fly back when we leave Panama. Maybe when they're older the kids will look back with fond memories and decide to do the drive again.