romeo we have a Subaru forester, and we were able to fit two Britax car seats (car seats only avail in Australia, but they are one of the narrowest models which is suitable from birth to 4 yrs, so can be both forward and rear facing), plus a narrow fitting booster seat. I did some research on forums and found the narrowest models - luckily the ones we already had for DD1 and DD2 were some of the narrowest available. I wouldn't recommend the Forester though if you need a new car. It's brilliant to drive but if I was choosing again I would get something wider - even an inch or so would be nice! Or a 7-seater although most of the models I researched were absolute gas guzzlers and that makes me feel a bit sick, wasting all that fuel.
On the issue of getting the baby out, I've told DD1 (5) the truth and she was fine with it!Although when DD2 was born, I told DD1 (2.5 at the time) that she came out "between my legs". It's a tricky one at 3.5 though, they are cluey enough to want to know more than just that!