You can achieve a usable lawn that isn't just grass by mixing in clover, dandelions, violets, etc and then mowing occasionally. And not every part of it needs to be "usable" either, so you can have a variety of spaces. I have a main area where my dogs play. I've started changing the corners and edges into vegetable gardens, fruit bushes, and I plan to turn the front yard into a prairie type landscape.

As far as critters, why not just let your kids experience it? If you live someplace with venomous critters, teach them how to notice and give a safe distance. In your home is sterile enough, so let the kids have something a little more wild outdoors.