I can only think of 3 reasons to fly via MAD instead of direct:

1. You want to fly in J (surely not with a family of 6... it's not happening with miles)
2. You actually are hoping for a misconnect so that you can claim compensation (but the MAD-BCN flights are frequent enough that you might not even get that)
3. You need status miles in a Oneworld FFP, which you can't get on LEVEL

When spending Avios on LEVEL flights, you won't even notice the "low cost" element, since everything you need is included in that "fare". It's not worth forcing the family to connect in MAD after a night of not sleeping much.