My first thought was to just sell around $600k per year to keep cap gains under 15%, but because of the position size that will take many years and could introduce more risk/stress/worry.

More like 18.8% if you include the NIIT that will be due on much of the $600k of LTCG.

Do a big, one time divestment of Berkshire, which will trigger massive cap gains taxes and a large increase in income and taxes from interest on the new cash.

This is probably the worst choice of all. Especially if you already "older" (let's say >60). Not only will you owe a ton of capital gains tax right now, but all that cash when invested in T-bills will throw off so much interest each year that will be taxed at your highest marginal ordinary income rate. In fact, after taxes and inflation, your net yield will be negative most of the time (because taxes are applied on nominal, while inflation eats away the whole amount).

We have two working age kids with good jobs, and would like to pass some on to them at some point.

That point should be now. For a few reasons. One, because they can make better use of the money now than in 20+ years when they are already fully established financially. You should be giving each kid (and their spouse), and your wife should be giving each kid (and their spouse) $19k a year. And the best way to do it is to give them appreciated shares of Berkshire. And two, if they decide to sell it, then they may still be in the 0% long-term capital gains tax bracket. Now THAT is tax efficiency. And three, once there are grandchildren, you can fund various savings plans for them as well, for example, the new child savings accounts ($1k up front plus $5k a year or something like that), or 529 plans to help fund their college expenses.