You've decided on a road trip with your toddlers because this gives you the most freedom to move at the pace allowed by the toddlers. Trying to hold to a fixed schedule is a recipe for frustration as they decide not to cooperate. This means the route and decisions on possible places to stay must be flexible. Prebooking unless you guarantee to be able to make the drive from one stop to the next is not recommended. It's better to have a number of options to aim for each day, leaving the result to the luck of whether the toddlers are in a good mood. This assumes, by the way, that you've decided not to go with the RV option which would potentially give you a home away from home no matter where you decide to stop.
So you set up the pick-up and drop-off points with the car rental companies. This may be an intended circular route or, if you pay a little more to drop-off at a different point, a straight-line route. Now what do you think about camping? Isn't it great to be outdoorsy? Well that rather depends on what the weather is doing. Camp sites are wonderful when the temperature is gently warm at night and you don't suddenly find yourself underwater as a nearby river floods when the rain forgets to stop falling. So what about B&Bs?
Moving into someone else's home is always something of a lottery. Many homes are not toddler-friendly with steep staircases and a vast array of interesting stuff on display at grabbable heights. Yet this can be the better option that more formal settings where you're potentially trapped in a rather soulless room. Even if you're lucky with the view, the sense of imprisonment with none of the usual toys and toddler diversion things on hand can be a bit daunting. In a sense, this can be solved by talking with the B&B owners before you confirm the booking and making sure the car rental companies are giving you makes and models which can be unloaded and reloaded quickly.