[Nyororin]

I like the sound of the elementary schools. I wonder why there is such an extreme change from relaxed and encouraging to hard and pressuring. Would someone be willing to share personal experiences with junior high school with me?

I can`t share direct personal experience with you, but a close family friend`s son just entered high school this April (in other words, finished junior high in March). He is about as close to being a little brother as someone outside the family can be, so I can give some insight.
As with elementary school, it does depend a lot upon how you approach it. The biggest stress is entering university - and in order to reduce that stress, a lot of parents try to split things up. If you can get into a good high school, the base level is going to be higher so you`ll have less study and stress when exam time comes around for university. As high school isn`t mandatory, there is a huge difference in levels between schools. From the view of a parent wanting their kid to get into a prestigious university (with the job opportunities that brings) that can be something awful...

But, in your case, I honestly wouldn`t be that worried. Chances are your children will not be competing on the same field. They`ll have native English skills, and the option to attend university outside of Japan along with the ability to move out of the country. Even if they follow the most common Japanese schooling model, they`ll still be looked at differently when it comes to getting a job. They`ll have advantages and disadvantages unique to a non-Japanese living in Japan.

As far as all of the extra curricular activities, I would want them to choose. I wouldn't however want them to get involved because other children are doing so. Family time is very important to me too. I want them to see and learn the things I do at home so they can learn the skills of taking care of a home. I wouldn't want them to come home just in time to eat dinner and go to bed.

This can be done. In the end it is really all choice. If one of them loves studying - they can choose to study, aim for the top of the class, etc. In the same vein, if one of them would rather do other things - they can breeze by at average levels and invest time elsewhere.
The key is the parents. If you are not pushing them into something they do not enjoy, things should be fine. The pressure of Japanese schools comes FAR far more from parents and their expectations than from the classroom itself.

In my opinion, the schools in my area (Southern US) are not very good, and this is why I choose Montessori schooling here. I like teaching personal responsability and working together to make the classroom a better place.

In general, Japanese schools are very heavy on personal responsibility and working together. This can and often does rub parents from the US in the wrong way though... Emphasis is put on taking responsibility for your own actions, and putting harmony ahead of "being unique". For example, children clean their own classroom and school building from a pretty early age. This seriously cuts down on graffiti and general dirtiness. They learn very quickly that their actions not only come back to effect themselves, but also others. As the cleaning is doled out evenly, they end up thinking about how much it sucks to clean up someone else`s mess. Being punished for defacing something is one thing, but having your peers also be disappointed in you because they had to clean it up is another.
But a lot of US parents do not think it`s a good policy, and that only the kids who do make the specific mess should be involved - and that regular cleaning should not be the responsibility of the children.
It`s all a matter of thinking.

Would it be wise for me to put my kids in a Japanese school since they're American, or should I put them into an American school in Japan? I am going to try to teach them Japanese as soon as I can find a good way to learn.

I am going to say the exact opposite of MMM. At 7 for your oldest, I would put them straight into Japanese school with no qualms at all. That is first or second grade (depending on the birth date). There is no stressful work, and everything is within the range that can be picked up in virtually no time. Entering an English speaking school, and never acquiring the lower grade level Japanese skills - and THEN switching over would be much much more traumatic. In first and second grade, none of the kids are all that settled in to school.
And at that age, picking up Japanese will happen literally before you know it. It seems to be pretty normal for a kid entering the lower grades with zero Japanese in April to be running around with no problems at all communicating with peers by the time summer vacation rolls around in July... And absolutely no difference at all in level before the year is done.

With your younger child, the possibilities are endless. Kindergartens are many and heavily varied. (Kindergarten is also not mandatory, but 95%+ of parents send their children.)
Kindergarten either starts at 3 or 4. 3 for 3 year kindergarten, or 4 for 2 year kindergarten. There are kindergartens which spend the day working on reading, writing, prep skills, etc... All the way to kindergartens which spend the entire day outside playing in nature with no academic expectations at all. It`s all up to the parent.

Does anyone know what American schools are like in Japan? Are there public American schools? What are these like?

American schools? I understand that they use the exact same curriculum as in the US with the addition of a couple of culture / language classes related to Japan mixed in. They stagger the school year to match that of the US. Also, they cost $$$$$$. If Montessori sounds painful, then I wouldn`t even look at American schools. (Especially as I get the feeling you`re trying to get away from that teaching style.)
As for public American schools... Japan is not part of America. There is no such thing. If you are on a military base (considered American soil) then there is public American schooling available. It is not open to those not involved in the military.