I think there are two issues here. One is the engagement issue and the other is the actual wedding.
The engagement was on the brother. He should not have hijacked (for want of a better word) an already arranged meal. If he wanted an adult only, family only meal or get together then he should have arranged one. To take a pre-arranged meal where the children were already expected by everyone, wasn't fair. If my brother rang and asked me to get a babysitter before going to an event where my children were expected - and indeed, expecting - to go, I wouldn't be impressed. If he took me aside, said that they had an announcement to make and would it be at all possible for me to arrange for someone else to have the kids that day, then I might be more amenable. So I think he cocked that up. I don't quite understand why it all had to be so secret from the kids anyway - so the children don't go, the DH stays home (?) and the OP hears the news. Hurrah she says, congratulations. She goes home, tells the family: "guess what kids, Uncle Bob is going to marry Sarah! Isn't that great!" I understand people saying that they didn't want to tell the kids in case they all got excited about going, but it's not like they were never going to find out!
The wedding is a different matter. They are absolutely entitled to invite, or not, whoever they like. If they didn't, for whatever reason, want the OP's DH and DC there, then they are absolutely within their rights to not invite them. What you or I might do in that situation is irrelevant (I would have invited them, because they're family, and if I was the OP, I would have either had a word with my brother as to why my DH wasn't invited, or I would have politely declined as I wouldn't have wanted to go without him). The father should not have made a scene about it - he should have gone to the wedding regardless of who else went or didn't.
I think both parties have behaved badly here - although not the OP herself, who while it would have been nice to congratulate her brother on his engagement, should also have been given a bit more notice as to why she was expected to leave her children out of a pre-arranged meal.