We recently faced a similar decision. We decided on the Palisades. Kids will switch to private eventually, but elementary seems good. We also considered AU Park but couldn’t find anything we liked housing wise and CCDC, while lovely, was too far for our specific commute.

Back to the original question, I'd add another vote for Mount Pleasant (the elementary is Bancroft). Amazing community, walkable city amenities, right next to Rock Creek Park, awesome for kids. Bancroft is dual language (but your kid doesn't need to know Spanish beforehand-- ours didn't), zoned for Deal and J-R (and according to current draft plans staying that way although of course we shall see). Real estate prices have soared, but still probably less than in Ward 3, and I'm taking you at your word that money isn't an issue.

I would move to the burbs, Ward 3 is becoming a hotbed of crime and if you are not real city dweller, you might not be able to swing it.