Hi. Did not read the whole thread. But let me offer another editing solution that may address the overexposed sky after the fact. Use the graduated filter in Adobe Camera Raw, or later in the full Photoshop.
I took the liberty of copying and editing your picture, and then applying the GF in ACR. Notice that here, the GF darkened areas other than the sky. In ACR, when working on the larger image file, the GF functions intelligently, and avoids darkening areas other then the sky. The GF can bring back unseen image information in the sky.
If you can control your flash unit independent of the camera, then another technique can work sometimes in these situations to retain more information in the sky. Turn off the flash. Adjust camera settings for a good exposure of the sky -- or a better exposure.
You could try to keep enough exposure in the background, too, while exposing for the sky.
As another way, try putting your camera in Program (P) mode, with Auto ISO set. Do a test exposure. Note the settings for Shutter Speed, Aperture, and ISO that P mode selects.
Put your camera in Manual mode, and dial in the same settings. As a guide, say the P mode still overexposed the sky somewhat. Lower the ISO or raise the SS or make the Aperture smaller (say f/9 instead of f/5.6). Try all 3 in combinations. You might favor a smaller Aperture, say f/9, to control the overexposed area, for depth of field.
Of course, when taking pictures of children, you will want a faster SS (usually not less than 1/100 sec, but sometimes faster, like 1/160 sec).
Experiment with this technique. You can gain control over exposure using adjustment for the ambient light while adding fill flash.
Note that if you put the flash unit in ETTL mode, the camera metering system will automatically expose correctly for the main subject in the foreground.
The ambient exposure has already been set by you in the earlier sequence.
The flash lighting does not affect or otherwise change the camera settings for the ambient exposure.
Important note: Canon digital cameras do not permit Exposure Compensation with the camera in Manual mode. You will have to adjust SS, ISO, or Aperture manually in order to change exposure. In the example given here, you'd likely prefer to adjust SS slightly so as to minimize affecting the ambient exposure.
Then turn on the flash unit, and add fill flash to illuminate the main subject.
Photographers shooting models outdoor use this technique routinely.
Many photographers have difficulty grasping the concept of two exposures occurring during an overall exposure involving flash lighting. It's easy to understand.
The flash unit fires first, for several thousandths of a second, then quits. The flash contributes no more light to the exposure.
The rest of the exposure happens from the ambient light.
See the two example photographs below your shot. The first I adjusted to f/11, 1/160sec, ISO 100. The second I shot with the flash unit in the cameras hotshoe, in the ETTL mode, leaving the camera settings unchanged.
For these two photographs, I did only basic adjustments in ACR, and none in the full Photoshop.
Once you begin using flash photography, your photographic opportunities will grow. You will also achieve more control over light for better exposures.
For more instruction, try this Web site:
http://neilvn.com/tangents/flash-photography-techniques/