Wirelessly posted (BlackBerry: BlackBerry8530/5.0.0.1030 Profile/MIDP-2.1 Configuration/CLDC-1.1 VendorID/417)
A few suggestions:
1) Airlines are sometimes able to offer lower prices on airfare and/or hotel if you buy a "package" from the airline that includes both. Not sure if this is possible on an open-jaw ticket, if you were to book DUB-ORD//NYC-DUB.
2) I'm seeing one-way airfares in August on Delta ORD-LGA for $115 USD (add $25 USD to check one bag). That means that if you can find hotels in Chicago for $35 USD/night less than the cost of hotels in Manhattan, you should be able to do four nights in each city -- and pay for your flight between the two -- for the cost of eight nights in Manhattan. As mentioned upthread, I would also check fares on Southwest -- which offers free checked baggage -- for MDW-LGA.
3) Travelzoo.com is currently offering very good rates for January-March at the highly-rated, 4-star World Center Hotel in Manhattan's Financial District. Rates will undoubtedly be higher in August, but you still might be able to find a decent rate there, either through Travelzoo, or by bidding on a 4-star in the Financial District area on priceline.com.
Good luck!