Thank you for your answer.
I am sure I did the photocopy-based reservation in the past. It may have been at JTB and not JR, I cannot remember that. At the time, it was a normal procedure that I had read about in advance.
However, it doesn't exist now, that's for sure. JTB site, various JR sites mention that reservations are possible only with the JR pass itself (they don't mention the JR East online reservation system).
I did have problems trying to reserve seats for the o-bon period, even when trying to do the reservations one week or more in advance; I'm talking from experience on that. The issue is that o-bon is a peak period, the shinkansen available for JR Pass holders are limited. I had in some case had to rework travel plans because the train could not be booked.
I will indeed try to make the reservations with them from the airport when they arrive. That will also probably eat a couple of hours (again, from past experiences) that I would rather have spared them by doing it myself before they arrive. Non-reservation or standing is not the best way to travel with children (even teens), but well, yes, there is also this possibility. I'm upset because I try to do my best to plan the nicest possible trip for my friends, and this look like something JR could fix - if they cared.
About the value... Yes ,it does depend on what your plan are. certainly, it is good value for them this time, they will use tickets for about 60.000 yen with a pass of 45.000 yen (two weeks version). 1 return trip to Kyoto from Tokyo is indeed about the same price as the JR Pass, which is what I always say to my friends when explaining about the JR Pass (my usual summer vacation is about showing friends and family around in Japan).
Of course, you could use Nozomi if you bought the tickets instead of using the pass, and there are some other plans possible if you reserve in advance and in the right periods, like Puratto Kodama for about 10.000 yen one way Tokyo-Kyoto. There are other ways too, like night buses which cost in the range of 5000~8000 yen one way, depending on the type of bus and comfort, and bringing you to the place you want to visit in the early morning.
If you forsake the idea of the pass, and see what else is available outside of JR too, you may end up with good deals/convenience. For instance, to go to Nikko with JR meant you had to do a detour and change trains at Utsunomiya, while another company has a direct line which is cheaper, too. Going to Narita from Tokyo is faster and cheaper on the Skyliner than on the Narita Express, etc... And with the split of JR in regional companies, some deals may end up better when using local passes (like JR East pass) in combination with other companies.
Having a JR Pass lets you save a bit in local transportation too, like using the Yamanote loop in Tokyo, that's true. On the other hand, there are quite a lot of other train companies in Japan on which the Pass doesn't work, so depending on the place you visit, the value varies.
In short, the JR Pass is not always as big a value as one may think, although it does have good value in a number of cases. It depends a lot of where you go, and how much you travel.
About having someone in Japan to make reservations... yes, I realize this is not the most common case for visitors. But they do have access to travel agents, so if it was possible to do reservations from abroad or from Japan in advance of having the Pass itself issued, then other people could do that though agents. I think this is what I did in the past, probably thought JTB, when I did those advance reservations.
Anyway, I'll live with that for this year, check if there is anything I can do using the JR East online reservation system, and otherwise do what I can on the day they arrive, at the airport. "Shikata ga nai", as they say.
But I think this is a big flaw in the JR Pass system, which, again, could be remedied in a number of ways if the JR group looks into it.