How about getting some 'magic' towels that absorb loads? Perhaps treat this like going to a festival, minimal clothing, babywipes to wash wish and just enjoy roughing it? Google festival tips and see what comes up!
I'm doubtful. Suppose it depends on what bedding you plan to pack. Mummy sleeping bags don't take up much space I suppose but what are you going to do for beds? Airbeds or those foam roll up mats will take up a fair bit of space. Inflatable pillows? Put your towels in pillowcases instead of taking pillows too?
I know that when my sister was going travelling there were lots of sites on what you needed to take and the best way to pack it. Maybe google for enthusiastic campers?
I would assume it is totally do-able with 2 adults, assuming at least one of your DC is old enough to carry a rucksack. I used to do festivals on my own with 2 DC and I have never driven, so I would lug all our camping clobber plus a 4 & 6 year old from East Anglian to Plymouth via the Underground so I should imagine that adding in one extra child but having an extra adult would even it out a bit.
For a start, don't take pillows, they take up a huge amount of space. Just fold towels or jumpers instead. Camping saucepans that have handles that split and fold round the pan and the pans sit inside each other are a godsend. They save so much space and are quite lightweight.
One thing I would say is don't underestimate how heavy 5 sleeping bags can be. We all have lightweight 3 season bags and use sleeping bag liners (which basically add another season to the bag) as the weight difference is huge, even though we now go with 2 adults, 2 DC and a car, but it makes the lug from car park to campsite so much easier.
Pack everything you think you will need, then carry it all to the corner shop and back to make sure you can do it. Remember that what seems ok to pick up in the house is very different to what you can cope with carrying for at least 10 minutes from ferry to bus stop, or drop off point to site etc.
Oh forgot to say, for the sake of your back, make sure it is a bag with wheels! A soft bag is better than a rigid suitcase as well as once you have hauled half of it out to set up in various bits of the tent, you don't want to be left with a solid, unyielding case getting in the way.