The basic answer is that you can do whatever you want, there are NO rules of any kind in scrapbooking.
Probably the simplest of all would be to use page protectors like the ones I've linked below. Not much work involved, just fill 'em up. You could intersperse these with more crafty pages containing the journalling, drawings, etc., so you can keep it all in chronological order. And they don't have to be very crafty at all - if you just want to glue them down to a pretty sheet of paper and move on, by all means do so.
The sticky-back pages your mom used (generally called 'magnetic photo albums' I think), are definitely not good for photos.
Whether you do separate books for each child or combine them as family books is up to you. Do you want to hold on to them so you can enjoy them throughout your life, or do you intend to give the books to the children when they graduate from college or get married or something like that?