First, it's awesome that you practiced, especially at 2 AM.
Second, I think we're all in agreement to don't do it unless you have to, but you've provided suffecient evidence that it needs to be done to check on kids.
Third, I'm going to buck the trend a little.
I agree that multiple settings on the light are a bit distracting, but the more I practice the easier it gets to transition. For this reason, I say use the lowest setting while clearing. From what I remember from the best defense and other shows/articles, is that it's best to hold the light in your week hand and don't shine it exactly where you want to look. Use the intermitent switch and angle the light so only the edge lights the room; maybe even cover it a little. The idea is that it keeps your night vision as good as possible while simultaneosly not giving your position or focus area away (as much). As long as no one/thing is spotted, the low light fine. However if you actually see someone, transition to the brightest setting and put it in his eyes. From there, you can conclude friend or foe and make you next decision.