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There's a fair amount on the internet. This may assist you;-    

... but by accident attended the award ceremony days after it. Not too sure if the kids would love it, but we found it an amazing experience. Been to Siena quite a number of times and it is a beautiful town, just the right size for us. Florence not so many occasions and did not really want to go back! Too many tourist for out liking, but we do know other good friends who think it’s the best place on earth!It can be hot in the Piazza and there will be a very large number of people, very narrow streets crowded with people is not too good for children, take lots of water and sun screen...

Thanks, the link was very useful; not a good idea for kids it seems.  Might just soak up the atmosphere of the festival days. 

The Palio is the single most intensively attended Event in Siena, consequently the city is rammed. You will not find parking within 5 miles, you will be crushes by people and if it is a hot day it will be unbearable. Take my advice stay away, especially with kids; the trains and busses are packed if you can get on them. It was the most disappointing experience we have had in Italy as the crowds were so immense, we could not see anything and spent an hour queuing for a drink, watch it on TV for the spectacle, but be warned it can take 30 minutes to get a race started.

I saw all the palios for several years, and got it down to a fine art.  The four days before the race itself on 2 July there are the trials - one at 9 in the morning and one in the afternoon - they are not well attended, except for the Senesi - and you do get an idea of what it will be like.  The day before they have (in teh afternoon) a type of dress rehearsal which is great.  its free to sit in the bleaches and watch - and the carabinieri ride round the piazza like demons - its great fun.  On the day itself there is a morning trial - the provaccia - where they just trot round very slowly and everyone boos.   At about 3pm the square starts filling up - its anightmare - you cant sit in the bleaches which are booked, so you need to stand in the main square and tehre is nowhere to drink, sit or go to the loo for 4 hours.  Avoid it.  Watch it on telly, and then leg it up to the church - I think its San Sebastiano in July where the victoious rider is taken and everyone cries and shouts and they plonk him on the altar and sing a Te Deum.   The historical procession on the day of the palio goes all round the city - best place to watch is onthe steps of the Duomo - and its a great spectacle - just teh costumes cost 4 million last time round - (thanks Monte dei PAschi) - but avoid the race itself, and the days leading up to it are much more fun.  

..but worth a read.

About 20 years ago I went to the Palio with a group of friends, including 3 small children. It was awful, after waiting for hours in the heat the children became distressed and had to be taken back to our rented villa. Some of the adults stayed on, but our good view of the Piazza from a flight of steps was blocked just before the race began by a party of notables who took their reserved places just in front of us. The race itself was over in minutes. but the processions of supporters of the various teams, drawn from different districts of the city, all in Renaissance costume and bearing banners, was stunning. It was straight out of Romeo and Juliet. As dusk fell, fights began to break out all over the city between rival various supporters. I saw one one young man in doublet and hose bite his thumb from a balcony at a rival group below (meaning 'you are not worth the dirt beneath my thumbnail'), one of whom, enraged, was hoisted up to balcony level by his friends and tried to drag the youth who had insulted them off it!  It took hours to get out of the city, the traffic was so bad, and also because we took a wrong turning down a narrow alley which ended in a steep flight of steps. Trying to reverse, we knocked over a whole rown of flowerpots outside people's doors... I'm surprised we made it out alive. 

I do nt think that the children will enjoy it. Generally, it is hot and it is always crowded. An amazing experience, though!

if you go,don't take the kids.if you're in the centre near the front you'll see your "section" but you can't leave,if the kids get thirsty they can't drink,if they need a toilet they can't go...if you feel bad..you can't get out till it's over.karen is right...the palio is not enacted for tourists it's a peculiarly highly followed local ritual quite violent on and off the track,expect many/most tourist shops to be closed for the event and in the evening even many restaurants too as everyone is busy with their street meals organized by the different quarters of the city...personally i've seen the palio twice the second time against my better judgement,i never want to go again.

Thanks for all the advice; I was getting the impression this wasn't an event for kids anyway but I think I'll try and see one of the quieter rehearsals and totally avoid the city on the day.  I doubt I could stand for 4 hours without needing the loo so there's no way the kids would manage it!  Is the dress rehearsal just on 1st July then?

Yes the dress rehearsal is on the evening of the dat before.  Theres no procession, but there is the race, preceded by the carabinieri.  Or, if you could get there for 9 in the morning, on one of the 3 days leading up to the day itself you can see a trial.  It's great, because the horses arrived from all over the city in  strict order, and all the suporters follow the horse, singing their special contrada song - its completely differnet from the day itself, but worth seeing, and you can sit where you like!  ALso its much more good humoured - the little children all come into the campo in crocodile singing.  I think the evening trial is at about 7pm - but its worth going early cos you get all the different contrade trying to drown out each other - and wearing t shirts that slag off the others... then stay away from Siena on the day itself..