Well I am really, really impressed with you and you REALLY should consider doing this. So what if you have a Challenge champ in your area. You probably wouldn't be charging as much, so you could get her "scraps" of people who appreciate the hard work but don't want to pay AS MUCH for one of her cakes, but would gladly pay your prices. Which would be competitive...not bargain basement.
I get the kiddos thing. I have 4 boys (11, 8, 6, & 2). It is hard but it can be done. I still consider my biz a fairly well-paid hobby but am going throught the planning stages of taking it truly part- to full-time from my home. It will be a couple of years. The 2 yr old is likely to go to pre-school 1/2 days when he turns 3 next january...or we may be waiting till the fall of next year. But the gears are turning.......
Regardless of what you decide. you are truly blessed with natural talent that should not go under-appreciated.
And by your name "hobby hoarder", it sounds like you are like me.....creative in many ways. So many ways that it's hard to focus on a true passion!
I have given up my scrapbooking dreams and cardmaking dreams.....have lots of stuff that i should really sell. But I am going to keep it "just in case". This caking seems to be the best paying out of all the things I've considered doing from home. It's also the most time-consuming, but rewarding, too.
Good Luck! And be sure to post often!