From a pedagogical standpoint, you always want to teach with a couple of things in mind:
- You have to have a standard for the class.
- The standard you set should be influenced by the level your students start at.
These two criteria frequently are at odds with each other, which is a shame: you want to teach the most engrossing, intellectual class so that each student can obtain a mastery of the important details of the subject, yet sometimes your students don't have the background and are not prepared to learn at that level, or are unmotivated for other reasons.
A third issue, and the one that you brought up, is the question of what to do when you have a heterogeneous set of students where some are unprepared (or unmotivated) and others are well prepared. If you are at an institution where the standard is very high, one option (and probably the right one) is to teach the material with the expectation that everyone will try their best and that it will be challenging for everyone, and let the cards fall as they may. Do your best to point the struggling students who want to learn the material to avenues for help -- office hours, tutoring, key reading material, etc. Don't worry particularly much about the ones who don't care -- if you're teaching an engaging class and they are bored because they don't really want to be there, that isn't your problem. If you find that you do have too many panicked students, you probably need to re-evaluate your teaching style or assessment plan, and slow things down. This is just the reality of the situation: too many of your students aren't prepared for the class as you envision it.
From your comment:
This is a community college so many of the students are working parents who juggle multiple demands on their time.
I believe in this case you may end up in the situation I just mentioned more than you'd like. I would venture a guess that many of your students have academic priorities that are less about getting every bit of learning out of your course, and more about doing well enough to graduate and be prepared for whatever the next step in their career is. I urge you to try to put yourself in their shoes (this is always a good idea) and try to see from their perspective what the course means to them. I have taught a college physical science course to non-science majors at the community college level where I was happy to give them the exposure to the material -- most of them had never taken a physics or chemistry class in their life (high school or otherwise), and I knew that it would not have been a good idea to try to force a lot of math-heavy science down their throats.
So I haven't really answered your specific question about how to "engage the interest of these students without dumbing down the course material or slowing the pace of the class." My suggestions are (1) to re-evaluate why you think you're already engaging (and tweak it to meet your students' level), and (2) to make sure you are providing concrete assessments for them to study for (or work on in lab). If your students know what they have to do to get a "B" versus an "A", this might lower the level of panic if they see that shooting for that "B" will be obtainable while still giving them time to keep the other priorities in their life straight.