yes,they can stay here legally until they get the notice from INS. Yet if
the application gets rejected, they should leave the country immediately.
That means, you have to buy very expensive tickets and rush back on the
second day.
Then I would suggest you to buy tickets on the original I-94 expiring date
and be prepared to leave as if they cannot get the extension. If they get
approved, you can change the tickets for $200 per person.
We submitted our application on early July to the California center online
and got approved in another month, early August.
Good luck. As far as I have known, most of the applications get through
recently.