She has two young children and is interested in pledging a sorority as a collegiate? That, to me, says that she isn't truly aware of the time commitment that a sorority requires. I've got a 4-month-old at home right now and can barely keep up with my alumnae chapter's activities -- and we only meet once a month! Personally, I think not extending this girl a bid is the best thing for her and the chapter. Perhaps you could encourage her to look into alumnae initiation at a later date instead?
Also, keep in mind that she doesn't have to be a sister in order to be a friend.
Good luck!
dzrose93