I too have a 3 year old and a 1 year old. I totally understand your predicament, my baby weight did not MIRACULOUSLY melt off while I breastfed, OR while I ran with both kids in the jogging stroller (screaming all the way!) It's totally frustrating to see my other mom friends lose their weight almost effortlessly... Of course it's just as frustrating to watch them effortlessly parent their well behaved children, while my little devils are breaking everything in sight! In spite of becoming exhausted just chasing them around, I really recommend joining a gym that has a kids club. At least you get a precious hour each day to yourself, even if it is spent in torture on the treadmill or in the pool.
Taking Alli has helped give me that 'extra push', which I needed even though I've been dieting, swimming, running and lifting weights. Losing weight is a SLOW process. The thing is, I've lost only 15 lbs but I fit into my pre-baby SKINNY jeans of 40 lbs ago... so SOMETHING good is going on. I think I've built up more muscle.
Good luck with your efforts, and with your little ones!