I've really only found two pieces of software that could serve all of my needs as a basis for the simulation project.  Orbiter, and Kerbal Space Program.  They've both got advantages and challenges.

Orbiter is open source.   The visuals in orbit are gorgeous... and feel a little more realistic.  The distances and velocities are realistically scaled.  The controls for the various ships are modeled with so much detail! There's already support for external instruments built by the community, so using a second machine to render instruments would be easier.

The downsides of Orbiter are similar to the upsides!  Because the physics are very real... getting into space is harder and slower in Orbiter.  The controls could be too complicated for kids to learn in a quick training session.   In the interest of keeping the flight quick I want a vertical launch vehicle, so the stock and community made orbiter spaceplanes wouldn't work out of the box - I'd have to design something and designing and tuning a ship for Orbiter would take a lot of work.

Kerbal Space Program abstracts the details in a way that I find really approachable to kids.  I also like the spaceship building component... I could see a future class where designing the rocket is the focus.  The KSP development community is really active right now, so there's a lot of support to bug with questions along the way.

The downsides of KSP are that it's not really set up to be a first person simulator right now.  The first person views of the existing ships are mostly internal views of the ships - rendered 3D views of the instruments and panels... with tiny views out little windows.  Most people play the game in external views.  So I'd have to do a bit of 3D modelling to build a command pod with a completely open field of view.   I'm also not thrilled with the external instrument options for KSP at the moment.  There are a couple of web browser based options that create some gauges... but there's not a complete offboard instrument suite yet.  This is development I'm pretty comfortable with though... and I think it would benefit the KSP community a lot as well, which is always nice.

In the end, my decision is that I'm going to make sure I build the simulator to handle both programs, but I'm going to focus on KSP first, because I think it's easier to get kids into the simulator without hours and hours of instruction in how to use the ship.   I want to make the whole experience fun and I want the takeaway to be about how awesome space and physics are - so I don't want to spend the whole time learning the details of how a particular ship works - I want to teach the general concepts in a way that lays the foundation for kids to go out and learn more on their own.

I know it's not open-sourced, but it's really affordably priced - it is open to plugin development, there's an active community, they're involved in education and it's just the right tool for the job.   The number of parts required to make all of this work means that the simulator isn't going to be free to put together... and I think less than 30 bucks for a great piece of software is worth it as a part of the simulator.  I'm going to make sure I design everything to work with Orbiter too.. so someone who's less compromising than me can build a completely open sourced simulator on top of what i'm doing.