The only somewhat catastrophic failure of the rotor I can think of that I've heard about is when someone went down a long steep hill keeping constant pressure on the brakes to stay slow. I think they overheated and the top layer of a different material started peeling off the base material of the rotor. Not to mention I think the pads and brake body were probably toast too.

You have a somewhat unique situation. Being in San Francisco with heavy cargo bike and two kids to haul around. So probably brake pads and rotors will wear out fast for you. But since you don't seem to be squawking about other brake issues than wear, you must be braking correctly down those hills they call streets in San Francisco.

Just keep checking for wear and make sure the center lock or rotor bolts are secure. You must be doing it right not to have any other issues but wear.