I would think about how hot it will be and how long the parade is when considering having kids do anything but ride a float.
I've been in several parades. I think riding in the back of a truck is better for little ones if they might get too hot and tired. Most parades I have been in go slow and start slow. We always ended up standing or waiting 2-3 hours in direct sun. The time waiting for your turn to start in the parade should be considered too.
Have lots of cool drinks for the participants. Did I mention to dress coolly?
It should go without saying to wear lots of sunscreen.
The Fourth of July is often the hottest time of the year. Heat exhaustion feels like the flu or even strep. It is
very uncomfortable.
Here are some ideas that are fun and pretty easy:
Attach a colorful animal shaped kite to a long pole. Carry the pole or attach it to the back of a bike.
Girls like ribbon dancing. You don't have to have a routine to make it fun to watch. Oriental Trading Company (oriental.com) has some that are inexpensive. They also have red, white and blue cheerleading pompoms, beach balls and kites.
Clown costumes are pretty easy and can be very light weight.
If you have a lot of people walking, you can have a few alternating lines of red and white dressed people with the front corner people wearing blue shirts with white stars. (Is that hokey?)
The parade that I saw that was the most fun to watch was the graduation parade in Coimbra Portugal. Every float threw out trinkets, food or drinks. The participants rode in the back of trucks without lots of decorations. But it was a blast because the audience had to get someone's attention to have something thrown to them. It was a lot of fun and very loud.
Can I come? This is making me want to join in. Where's your parade?