I think it's a FABULOUS idea, and am always in favor of recycling or re-gifting when necessary, or when practical. Like other said, I doubt they'll remember exactly what they got for DD a few years ago anyway. And you *know* DS will love them just as much (and he doesn't know if they are brand new- just that they are new to him and he'll love them).
To heck with anyone who gets upset. If they do, let them know that they are more than welcome to provide funds for you to buy the kids gifts with for next year.
I'm a thrift store person, and have no issues with purchasing items that are already in existence. Makes that carbon footprint just a little smaller and that money travel a little further.