I went to Algeria with family (including my 2 small children, 7 and 5) last Dec/Jan just before the Austrians were taken in Tunisia and reportedly transported through Algeria to Mali. Algeria was fine then, although it was eerily quiet from a tourist perspective. I am much more worried in places like Joburg.
Given the events of the last few months (ramp up in activity in N.Mali + the Austrian story) I would be happy enough to go back myself but would be jumpy about taking kids. This sort of says that there is an objectively greater risk of something happening now which I can cope with personally although I would not want to take responsibility for bringing anyone else into the region. That said, I would have thought you're better off on foot provided you keep your route well under the radar - in other words, keep all the details about your precise travel plans to just yourself and throw in a few dummies e.g. leaving towns at unexpected times, change plans here and there. In the end the is some risk of kidnapping now (less perhaps since the Austrian story has not been resolved easily) and it depends how you think you'd be able to deal with several months of unknown at the hands of whoever in N Mali.
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