What does he seem to be afraid of? loud noises? crowded que? dark ride? Traveling to the World with my 2 little ones over the past 6 years, we've collected quite a few 'tricks', hope something is helpful.
My DD was overwhelmed by the noises of shows, parades, fireworks and some rides...brought her to tears. Total sensory-overload=meltdown. To help her, we got some kid-sized ear protection, think Air-traffic contoller but in kid size and colors.
They block out the loud noises and cut down ambient noise but the kids can still hear you when you talk to them. Peltor is the brand we found and they work great. Clip to a backpack when not in use. Now with her 'earmuffs' she's fearless and can relax and enjoy.
My son hates crowds. "Earmuffs" and a travel-size MagnaDoodle (I think someone else suggested that too) or favorite small toy help draw his focus from the crowd to a more happy place. We play waiting games...Disney trivia, of course..in lines. It draw their attention to something more fun and helpd pass the time. Sticking to open venue attractions is a great tip you gave them and a great way to introduce some shows/attractions. Another poster had a great list. Then they have a safe/fun point of reference to go by to try the dark rides.
For the dark rides, I collect character key chain lights from the Dollar Store before a trip and they clip right to the kids lanyards so they can use them whenever needed. I do try to find things with a soft light that won't bother others on the ride but just be bright enough for the kids. Your sister may choose to run out to Walmart or something to get a little light to help make this trip better. Or spend the money for a light up toy there in the park.
To overcome character fears, my kids decorate a mini clipbaord before we go and with Sharpies and 4x6 blank index cards in hand, we get autographs from anyone the kids want. The kids called it 'coloring the paper' and if they are only willing to go to the same one character over and over, we aren't out an expensive autograph book. For my kids, having a task when meeting the characters made it a little less scary. They could better anticipate how the meeting would go since they could relate to the coloring and knew it was short! It took quite a few index cards before anyone wanted to pose with a character but we have some really cute candids of the characters signing while my youngest waits and watches with such a serious look. Also, start with face characters...a little less intimidating. Judges Tent is nice since it's just one or 2 families at a time in the room and a little less crazy. The princesses are usually the only face characters there though, don't know how much that helps.
Hope any of this is helpful. I know it can make your heart sink a little to see your child upset at WDW. Take heart, there are ways to make the trip worthwhile for all, it just takes a little creativity and a LOT of patience.
Lots of pixie dust to your sister's family and hopes that they find some magical moments as a family to take home with them.