I've been to Egypt twice. Once pre-dc and once with dd as she'd been learning about Ancient Egypt at primary school so we thought she'd like it.
Each trip was part of a month away, travelling around and also visiting a couple of other countries.
We went to Cairo (pyramids and Egyptian museum), Luxor (Valley of the Kings), Dahab (diving) and Abu Simbel (I've forgotten the town we stayed at to do a day trip there). Years ago so I can't remember where else.
For both holidays, we stayed in budget hotels and ate in small, local restaurants. We didn't get hassled and none of us had food poisoning or stomach upsets.
We were in Cairo at the time of the Arab Spring. We walked through Tahrir Square and chatted to some of the people who were occupying it. Sadly, we were still in Cairo a few days later when the occupation was broken up.
Despite being there at a fairly volatile time, we never felt unsafe.
I'd recommend Egypt with children if you're reasonably well travelled and like history and experiencing different cultures.
No idea what AI resorts are like because we didn't stay at them.