Well, undersireable? Yes. There's an area of Lake Oswego that's off of McVey, and the other part of the town which is on the western end very near I-5. Much too busy, noisy, transient-type traffic, commercial, etc. The Sunset area of West Linn looking over I205 is
very noisy as well (but some spectacular views of Mt. Hood). And I think you'd have a far greater feeling of isolation (socially) in Oswego - it's terribly snooty.
One reason I like the area you mentioned is that its available land to build on is
extremely limited. There are no traffic thoroughfares; traffic is mainly limited to people living there. The neighborhood is already established, and the possibility of huge changes is extremely remote. That's what I mean by 'pocket neighborhood.'
It all depends on your perspective and needs. Having moved to this area from a very large city I'd have to say again - there are no bad areas in either town. Bad to me means you can't walk down the street after dark, bars on windows, roaming bands of little wanna be toughs, addicts passed out on your door stoop, etc.
I am very partial to WL, or what it used to be. You have different criteria with small children than I; WL (and PDX in general) has gotten too busy and crowded for me.
Scone had some good points. But there are elitists everywhere, in every walk of life. Neither town is a great place to be if you are middle class [if we have such a thing anymore~

] and struggling. I wish I could be of more help to you, but for familiy-oriented things to do, and general lifestyle? West Linn, hands down.