Welcome Maggie!
I hope you have a wonderful time! And happy birthday to you and your sister! Since you are staying on property the answer for park transportation, Extended Magic Hours, and things to avoid is the same wonderful response: you don't have to worry about it. Just make sure you have your Key to the World card with you and you will be fine for busses and EMH (although I've never been asked to show it). For the things to avoid, my advice would be to do what you want to do. Lines are not the worst thing in the world (bring one of these:
http://www.amazon.com/Invisible-Ink...WYHC/ref=sr_1_1?ie=UTF8&qid=1331313325&sr=8-1 if it's unbearable for you), and if you kind of resolve yourself to the fact that you aren't going to see and do everything, then you can figure out what your priorities are and plan accordingly. You will have a GREAT time.
Now to my advice for the n00b.
I've had three trips to Disney recently. One was planned for me, one I planned the ever loving crap out of, and one where my friend and I just "took it easy." My recommendation would be to plan, but do it lightly.
Decide on a couple of things you don't want to miss (for example, Fantasmic is only shown on certain nights - this should help
http://www.wdwinfo.com/wdwinfo/hours/apr12.cfm) and plan the days you visit the parks based on that. Make a short to-do list, then leave lots of room for magic to happen. Squeezing in everything you want to do just means you are squeezing out all the time for those special magic moments of discovery and exploration. One of the best magic moments on my recent unplanned trip was when my friend and I were so tired we just said "who cares what people think," took the raft to Tom Sawyer island, and took a quick mid-day nap on the benches under the shade of some peaceful trees, right in the middle of the hustle and bustle of Magic Kingdom. It was pretty sweet.
One more thing that was really awesome, and since you are going to be there for an extended time, is taking some time to visit other resorts. Find a few that you want to explore (Wilderness Lodge, Animal Kingdom, Port Orleans Riverside are my favorites) and make a day out of it because you have to bus hop (take the bus to a park, then transfer to the resort bus. rinse and repeat). The resorts are almost attractions in and of themselves (and since you are staying at the Polynesian, you already have one covered!) and there's definitely some not-to-be-missed stuff there.
For dinner reservations: you may have a hard time getting them because your trip is so close. If fancy dining is something that is important to you and your sister, my advice would be to keep the Dining number on hand throughout your trip. If there is a restaurant you really want to hit, call the day you are in the park/resort to see if there have been cancellations, and keep calling throughout the day. Also try a walk-up.
Lastly, the Character encounters are what you make of them. I didn't know this the first time I went and thought it was kind of lame. But the second time I went, I made a plan. When I go, I honestly pretend it's real and that I'm *really* meeting Mickey Mouse, Tinkerbell, Show White, etc. I say all the things I love about his or her adventures and make sure to pose silly for the pictures, just as if I were 5 and it was the first time. It is a lot of fun this way. Plus, it lead to an honest-to-goodness Disney moment where, when I was meeting Sully and Mike from Monsters, Inc, for just a moment I looked up at Sully and forgot that it wasn't real. For just a moment, I was truly meeting James P Sullivan. It was amazing

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I hope you have a wonderful, wonderful time. Please keep us updated on how your trip goes.