The drawbacks to the FBI you've pretty much nailed - moving and early retirement. To me, moving isn't an issue, but I'm an Air Force brat - my childhood consisted of moving every few years. For a kid, it can be a wonderful experience - nothing better to demonstrate that people are both different and the same. The drawback is that you can tend to feel like an outsider quite often, and depending on how it breaks, you don't really develop those life-long friendships and sense of "place". So, to a large extent, you can't really base it on how it affects the kids - there's no way to know. How does your wife feel about it? If she doesn't like the idea, if she has close ties to your current community, or if her family is nearby and she's close to them, then moving during a career could be really tough - and you don't need that as it can affect your job performance.
The early retirement is a pain; it means you'll have to plan for a career after the FBI; while the FBI at one time helped with moving expenses (don't know if they still do) it wasn't always full coverage. I think these days you can count on a move as causing a hit to the family income and your savings. In otherwords, you can't expect to make enough over your FBI career to be sure you can actually retire at 57. Are you prepared for that or given it any thought?
At 32, it's too early to say that you can't mold yourself into a politico (which a Chief of Police has to be). Rather than thinking about whether you can do it, think about whether you'd LIKE doing what your Chief has to do. That may help point the way. If you admire his ability and get into the chess game that it is, if you think the administrative tasks are interesting, etc., then that might be the answer.
Finally, what do you really want from your career? What aspects of law enforcement do you like? Think in those terms, as well. When you say you want to be part of something bigger, what, exactly, do you mean? Do you want to be someone in control? If so, then the FBI probably isn't for you - odds are unless you become a Bureau head that won't happen. You stand a better chance of that in local law enforcement. If by bigger you mean part of a larger law enforcement unit, or more prestiguous, or more varied, then the FBI would be the ticket.
I know I really haven't given you a direction, but those are the areas I think you need to really look and and be honest in your appraisal. The good news is that you looking ahead in the first place and making plans. Just carry through with the reasoning and consider every aspect and your decision will be the best for you and your family. Good luck!
