OK, I am just getting into the research phase not with 6 weeks until the family and I embark. My wife and I will be traveling with our two boys this time around (10 and 14y/o). We have an entire 3 weeks to explore.

The only plans in place thus far is the fact that we are flying into RIO, spending a couple of days there and then heading to Foz de Iguacu for a wedding and a couple of days exploring the area.

The things on my list that we are trying to figure out how to work in are an excursion in the amazon on a live aboard, Bonita, and Machu Picchu...

I know it is a huge country but flights seem really expensive in country. Does anyone have experience with bus travel? We were thinking we can take overnighters and such as needed. My main goal is trying to keep the costs down here.

Please chime in with any must sees, guide suggestions, thoughts, anything!

Much thanks!

Three weeks is not a long time to see even the major highlights of two South American countries. Make sure you leave sufficient time in Peru to acclimatize to the altitude. And...
No, you clearly don't know just how huge a country Brazil is or you would not even mention bussing to the Amazon on a 3 week trip, even one dedicated only to Brazil. Fly or forget it. Buying flights well ahead is cheaper; the closer to departure, the more expensive. Flights to the Amazon (from the sights in the central,part of the country or the northeast) are probably the most expensive domestic routes. Again, if you can't afford to fly, leave it for the next trip. If you are determined to go, buy flights today (but IMO, a few days' tour is likely very superficial).
Note: Foz do iguacu to Lima is going to be about $900 pp. if purchased now.
If you are indeed going to the falls, you might consider a few days in the southern Pantanal to see some wildlife. Fly into Campo Grande, do your tour (leave 5 days: 2 for travel in/out and a 3 day tour) and then take a bus through Dourados and on to Foz, overnight.
Otherwise, in Brazil, you could go to some historic Colonial towns in the mountains, visit a rural island of beaches and nearby small Colonial beach town, or fly to the heart of African culture and music in Brazil, all within reasonable travel time/distance/cost of Rio.

Both Peru and Brazil are vast countries and could easily take up all your time. To do both countries in three weeks, you would have to settle for a sampler. I did something similar back in July / August; click on my username to take a look at my report for some ideas. Really depends what your interests are and what you hope to get out of it.

OK I am out on Peru for this trip. I don't wish to spend my time rushing around.

We enjoy ecotourism so I will look more into Pantanal and also my wife is interested in exploring the Gruta do Lago Azul area.

Any more localized suggestions?

The Gruta (Cave) is one of the sights of Bonito. A visit that area to do some snorkeling/river floating can easily be combined with a trip to the southern Pantanal, using the bus system between them. Excursions in the southern Pantanal, from Campo Grande, Miranda, or Bonito, are generally less expensive than those to the northern Pantanal (where the possibility of seeing jaguar is larger however) from Cuiaba. The northern Pantanal makes Nobres, a similar area to Bonito, accessible.
For a southern Pantanal/Bonito trip, you should plan to dedicate about a week, including a full day to travel in and a full day out. You can contract with a guide and arrange a fazenda stay in the Pantanal ahead of time or do it from Campo Grande, Miranda or Buraco das Piranhas. Read the reviews of guides/tour companies VERY carefully.
Check the buses on www dot buscaonibus dot com dot br to get an idea of those that run from Campo Grande through the Pantanal and into Dourados, where you change for Foz do Iguacu. Or you could backtrack the several hours from the Pantanal to Campo Grande and fly, but I believe that will route you in a further backtrack through São Paulo or another hub.

In addition to Rio, the falls and perhaps the Pantanal, you may want to look at some of the charming Colonial towns in Minas Gerais state (Ouro Preto, Tiradentes, Congonhas, etc), accessible by bus from Rio, or from Belo Horizonte.
Or you might enjoy a few days exploring the African cultural heritage and music in Salvador, Bahia, with its colorful historic district, and some of the beach villages (Praia do a Forte/Guarajuba, Itaparica island or some others in the Bay of All Saints, Morro do São Paulo, Boipeba, Barra Grande/Marau) and the Colonial river port of Cachoeira, that are good day or overnight trips from there. The Chapada Diamantina, with waterfalls and hiking, is an overnight bus ride away.

Thank you for all of the wonderful suggestions Samba!