if your kids aren't paying other loans and they qualify for student loan interest deduction you could gift them the $ up to annual gift limit to pay and deduct 2500 interest.
Hmmm ... I don't understand this option at all. The OP has Parent PLUS loans, which are under the OP's name, not the child's.
As to the OP's original question ... when it comes to having a debt hanging over your head, you should do what will make you sleep better at night as long as it's somewhat rational. Would it be fair to say that you could expect a 7% return on your 401k investment over 10 years? (I usually guesstimate 8% when I consider my low-cost index fund, but if your 401k has a high cost or is also invested in lower-yield areas, then maybe 7% would be out of the question)
The way I see it, if it were my 401k, I would assume that the interest I'm earning there is going to mirror the interest I'm paying to the PLUS loan. If you take a withdrawal, it will get taxed and then you're not only paying more interest on that money than you're paying on the PLUS loan in any given year, but you're losing out on any interest that the money would be earning. So, I would leave the 401k alone and, if the student loans are really bothering you, find something you can cut back on to funnel some extra money towards those loans each month.