puzzledad: do not despair! Although the 'Ivy League' schools deserve what reputation they have - they are excellent schools - they are not the only excellent schools around. Much of college is what your child chooses to make of it. I recommend you read this post that I saw yesterday from taomom:
To the seniors of 2008 I think it will give you and your son hope and inspiration. From your description, your son will do well and prosper wherever he lands.
I would also encourage your son to write to the school that he mosts wants to attend, feels most connected with, that turned him down. Have him express in a very personal way what attracts him to the school, what he thinks he will bring to it and what he will be able to take from it, and ask them to reconsider the denial. Certainly commit to a school he's been accepted to by May 1, but have him send that letter before May 1. You never know what can happen. This should be sent without expectation, but with hope.
Oh! and on the younger child, encourage him to do all that he wants to do and continue to work hard. All of those accomplishments will teach him how to proceed in life and will prepare him for the future. College admission is a good goal, but he will gain much more in tangible and intangible ways that will be very meaningful to a successful life.