Defamation cases in any jurisdiction are about the publishing of FALSE information about a person. It appears that what was written was true at the time of publication.
The above is not intended as legal advice. The response does not constitute the creation of an attorney client relationship as this forum does not provide for a confidential communication.
Truth is the ultimate defense. You are also not a public figure. If they placed a notice of your arrest, they should be posting that the charges were dropped. You could ask him nicely in a letter to take the information down - or preferably a nice letter from an attorney asking the editor to take it down and threatening legal action potential legal action. What were the charges? Why was the cases dismissed. And why would it bring ridicule and harm to your kids?
Who is going to look back at something 3 years ago, it's old news. Did they also indicate in the paper that the charges were dropped.
I am sure the editor has his position, but if the paper gets hit with a lawsuit, he won't be so happy because it will probably cost the paper a lot in legal fees. Then you might get additional press over the law suit.
Talk to a lawyer. Good luck.
Legal disclaimer: I am not your attorney and we have no attorney/client relationship. This response is submitted for informational purposes only. This is not legal advice, nor is it intended to be taken as such. Anyone considering the above referenced situation should always consult an attorney within the jurisdiction before taking any action based on this, or any other information.