My €0.02
In SLO, also stop on Monterey Street and check out
Bubblegum Alley - great gross factor that kids like.
And if a University is in the plans, I of course will pitch for my alma mater,
California Polytechnic State University - San Luis Obispo (Cal Poly - SLO).
While Highway 1 IS a slow way to go North, it is the best route from San Simeon to Monterey. However, take the 101 up to San Luis Obispo from LA (from San Diego, the best is 5 North to the 405 North to the 101 North.)
In San Jose is the
Winchester Mystery House - always a favorite of mine.
And I agree with Alex - Hearst Castle and Monterey Aquarium is probably not do-able in one day. While individual tours at San Simeon are two hours, the drive up and down the hill adds another hour or so. And the aquarium requires at least a half day. I doubt you could do both adequately in one day.