It looks like there is an option via MSP with a 57 minute connection instead of the 5.5 hour connection. Since this isn't an international flight that should be fine ex-MSP. That flight has tons of space -- it's on a CR9 but that may even be for the better because you can do 2-2 with the kids and just have the row across. That doesn't necessarily help you with seats on the ANC - MSP flight but everything that day looks quite busy already so might be your best option to at least address the long layover.

Why they re-ticketed you on the 5.5 hour layover version instead of the 57 minute connection is bizarre but that's probably your best bet. If you can in just emphasize that the change was involuntary and unacceptable especially when traveling with 2 children. Ask to be re-booked on the below and they should do it without question as an even exchange. If they don't ask for a supervisor.