SanDiegoFIRE,
I think you were pretty clear in the original post that you are planning to retire early, that you save and invest substantially, and therefore you are a legitimate member of the FIRE-seeking community. So thanks for posting. I welcome your post with an open heart.
You were also pretty clear that you what you want is advice on what to do with your house (stand pat, remodel, move, etc). It sounds from your posts that you feel this decision should be made in the context that the connections with wealthy people obtained by living and entertaining in an expensive manner has a significant positive effect on your kids.
That basis for the analysis you're seeking is outside the normal scope of this blog because it directly conflicts with the viewpoint of Mr. MM and most of the readers. You're asking for something that people can't give because they don't believe in it. I don't think they should attack you, and I think your care for your children is extremely well meant. Realistically, your decision needs to be made by balancing factors that only you can judge: How much associational benefit you think they will get vs what you will spend. That's a judgement call outside the scope of this forum.
My guess re the house is you'll be happiest if you figure out a remodel that you like. Total guess, though!
That said, I am curious about your extremely strong conviction that socializing with the wealthy is critical to top-level careers. I haven't gotten business that way, so I don't know. Is most of your money earned by connections made in such socializing?
I have seen often in life that people do make big hiring decisions via referral from people they trust. It looks like both "insiderness" and competence make a difference. Good luck in giving your children a head start on both.