I don't know the answer, and I think you've gotten a lot of good advice already. But I do want to say that my kids watch no TV, only DVDs, because I don't want them watching commercials, and the only DVDs we buy are educational (which it sounds like you've got covered already). We like Signing Time (even though my kids are both talking, but these DVDs are great) and French DVDs (I'm teaching them French), plus some ABC DVDs. My rule is one (usually about 30 min) DVD a day, but most days go by without any DVD at all. I don't put one in unless they ask for it or are getting totally out of hand on a rainy day. I also usually watch the DVD with them (although sometimes I do try to get dinner going) so that there is at least some interaction involved. So 2 1/2 hours sounds like a lot to me, but I'm basing this only on a gut feeling and not on evidence of anything. I definitely think some (educational) TV or DVDs is fine and even good, even for toddlers, despite all the research you hear about. I haven't seen any research that restricts the type of programming or differentiates between TV and DVD, and I've definitely seen that the DVDs we've used have taught our kids ABCs, sign language, and French. Used in combination with hands-on instruction, I think they can be valuable tools.
My husband and I do not watch any TV ourselves, although we rent movies on the rare occasion that we have time for that. I don't know how much TV you and your husband watch, but kids do learn their habits from their parents, so you might pay attention to how much you're watching versus how often you go "play" outside etc.
My mom got me a book called "Unplugged Play: No Batteries. No Plugs. Pure Fun" a couple of years ago, and it has some great suggestions for activities kids can do, some by themselves. One thing I let my boys (1 and 3) do sometimes when I'm cooking and they're having trouble occupying themselves is to decorate cans in my pantry with stickers. I get little round stickers in different colors and ask them to stick a sticker on every can. Then they can sort the cans into groups by color. When all the tops have stickers, they can put stickers on the bottom! They love this, and it keeps them out of my hair. The book has lots of other ideas as well, plus it has nice suggestions for birthday parties.
We've also played "post office" with junk mail. First they put stickers in the corner for a postage stamp and then use an ink stamp to stamp all the mail just like they do when it comes into the post office. Then they distribute it around the house to various "mail boxes" (just shelves and chairs, but you could use old shoe boxes or something). Then they take a bag and go collect the mail. This takes minimal direction from me, especially with the 3-year-old, and it is a good thing to do while you need to be cooking dinner.
Play dough (the above-mentioned book has a good and easy recipe for the homemade type) is also great if your kids are old enough not to eat it. Set them up with some cookie cutters and rolling pins and then go about your business.