itinierary via JR Pass

Hi There,

I'm travelling w 2 kids aged 12 & 9 and 2 adults. Our itinierary is

Day 1 (sat) 25 Jun - Haneda (arrive in the morning)-
Day 2 (Sun) 26 Jun- Tokyo-
Day 3 (Mon) – 27 Jun-Tokyo-
Day 4 (Tue) – 28 Jun early morning Trip to Hakone - (night in Hakone)
Day 5 (Wed) – 29 Jun Full day in Hakone – EITHER take train from Hakone to Tokyo (night in Tokyo) OR Hakone to Kyoto & night in Kyoto- which is better?
Day 6 (Thu)- 30 Jun Full Day in Kyoto (night in Kyoto)
Day 7 (Fri) – 1 Jul Kyoto- Nara- Kyoto (night in Kyoto)
Day 8 (Sat) – 2Jul Train to Osaka - Night in Osaka
Day 9 (Sun) – 3 Jul Osaka- Hiroshima
Day 10 (Mon) – 3 Jul night train from Hiroshima- HANEDA airport - fly out from HAN

How does this itinerary sound? I was wondering whether the best option would be to get a 3 day pass to get around the city in Tokyo for the first 3 days and then start the 7 day JR pass on Monday (Day 4) - is there an earliest starting time to 'activate' the JR Pass? I heard that we need to do it before we enter Japan. Would all the trains I would need for the itinerary above be covered by the JR Pass, including the Hakone area? I will consider buying Hakone Day Pass in case the Hakone area is not covered by JR Pass.

Am I able to reserve seats in advance? What about if there are any changes?

Thanks in advance!
Richa