I am sure there are negatives and positives to the party. But make the best of it. I understand if its a budget thing, but we have been to the halloween and the christmas party both are good but the Halloween one is our favorite. From seeing the headless horseman to the boo to you parade to the the vilian show to the fireworks. My daughter who will just be shy of 5 years old when we go is so looking forward to it.
As far as crowds go its less crowded than a busy day at the park. While we have never been on halloween, we have been to sold out parties before. While mainstreet was crowded as usual. It seems that people choose to go different routes with the party, some use it for shorter lines on the rides, others for the meet and greets, and some for the parade and others just for the candy.. So it really seperates nicely.
To each their own, but sounds like you want to do something special for your kids on Halloween, and everything else seems iffy, as to not sure whats going be happening. Why not go for the sure thing, plus not many kids can say they trick or treated in the Magic Kingdom on Halloween.
Good luck in your choice and enjoy your trip. I am sure we will pass each other at the hotel or by the pool as we are there the same time.