I've done both and it's something of an apples and oranges comparison.
The menu at the luau is better, but the buffet at Dine with Shamu is more extensive and they have a separate kids' line with kid-friendly food like mac & cheese, chicken nuggets, and the like.
The DwS buffet has vegetarian, beef, chicken, and seafood entrees, along with salad, veggies and rolls. Also a very extensive dessert bar, running mainly to puddings and cookie/brownies.
The shows are VERY different, of course. I would worry that a 5 and 7 year old might find the luau a bit boring. At least at the Shamu dining event, they can get up and run around.
I posted my thoughts on DwS in a separate thread.