The reason I said three nights in Venice is too much is 1) Venice isn't that big. You can easily see almost everything in one day and have a second day for a boat trip to Murano.
2) it's the hassle and hustle capital of europe. Once you have drunk a tiny glass of tap water at Piazza San Marco and paid 10 Euros for it to the most unfriendly waiter ever, you will see that surviving in there without going broke is tough. You are travelling with two teenagers, who will be wanting food at lunch time - now, not later. They will hit the pizzaria not really caring that mum will have to spent a hundred bucks on what would cost 20 at Pizza Hut at home. The tourist sharks and touts are everywhere, and you just can't escape them.
I remember going with my family to Venice a few years ago. A tourist shark picked us up after arrival and offered to get us to Piazza San Marco - "private taxi boat, lady". Mom agreed on 50 Deutschmarks (about 30 USD then) and the guy told us to wait "just a second", he would get the boat. We waited for over 20 minutes and when he came, he had another family in tow. But the boat was big, so it was ok. So we thought. But the guy kept bringing people, in the end we were over 25 in a boat that seated 16. All the children and teenagers ended up in their parent's or each other's laps. We were very uncomfortable. Mecifully the ride was a short 15 minutes, but without the scenic tour of Venice he had promised. Then the killer blow - that idiot demanded 50 Deutschmarks per person! From every one on boat, children under six "special offer" for 25! (The things my mother said to the guy in German after hearing that are legendary in my family.)
You are better of in Mestre, because in Mestre you can easily hit the supermarket for a snack (impossible in Venice) and have the day to yourself without being bothered by touts.
Lastly, I was wondering would it be crazy of me to think that I could rent a car and drive from Venice back to London?
Yes, it would be, because you would have to drive in Italy. As anybody who has ever been there, it takes a special kind of driver to that. It's the land of the Ferrari and the Holy Virgin Mother, of people kissing their crosses before they start the engine - with good reason.
There is also the little problem of the borders. Unless you find a car renting company that allows you to take the car all the way from Italy into France, you will have to change the car. And you couldn't drive it across the Channel anyway, you would have to leave it in France and take the ferry and the train to the UK, because these bloody Brits drive on the wrong side of the road.
As for scenic routes, well, you will probably have to come back and buy a railpass for Switzerland and Italy. Go from Germany through Switzerland to Italy, then all the way down to Rome and Napoli. Nothing like the Alps, the Dolomites, the beaches and the Vesuv to make you dream.