Okay so some background - we went for Christmas week every year from 2009 - 2018. We're an older family. We started going when I was in my sophomore year of college and my sister was working as a teacher for a few years (so could provide some feedback regarding the school part.)
We went in 2009 as a one-time celebration. We had always gone during the summertime since my parents never wanted to take us out of school and because that's what worked best for my parents. By 2009 my dad was retired for a few years, my mom had enough seniority to take off whenever, and my sister had off during school breaks, and my college had the month-or-so off for Christmas break. My dad had battled cancer and went into remission in 2009, and he said "you know what? Let's go celebrate in Disney!"
Traveling
We drove down to save costs at the time and because my parents weren't too keen on flying. We always drove growing up (from NY) so it wasn't a huge deal. In 2010 we tried Amtrak and....never again. We drove again in 2011, and have flown ever since.
Christmas Eve falls on a Friday this year, so this could add some hiccups if you choose to fly. You now have the premium of flying during a holiday + flying on a weekend. If you can fly on 12/23, then I'd push to fly out that Thursday, as you may save some money. I'd also consider Southwest. The beauty of Southwest is that if the cost of your trip goes down, you can get a credit for the difference. So if you pay $200 to fly and 2 months later you spot it at $150, you will get a $50 credit per person (if you're quick enough.) For this reason I'd recommend booking two one-way tickets, rather than round trips. Just easier to deal. Buying with points is even easier. You simply choose the cheaper fare and it'll refund your account with points.
I'd write down everyone's confirmation numbers in your notes app, screenshot it, and have the two most tech-savvy people hold onto it. Check on Tuesdays, when most airlines have sales, and keep an eye out for sale emails. That's when you jump on and check if the fare went down.
Also SW allows up to 2 bags per person to fly free, and are pretty accommodating with carry-ons.
Hotels
We aways stayed Mod just because we were older and needed the space and larger beds. As we got older and could pay our own way, we upgraded to deluxe. Having gone to different resorts to grab a bite to eat, I'd say Art of Animation is probably the best decorated for Christmas. POP would be a good option, as you can walk over to AoA to grab a bite to eat and walk the grounds...and is also cheaper than AoA.
It's a tired cliche, but if you don't plan on spending a lot of time at the resort, then you don't really need a nice resort or room. We begged for a full balcony at Beach Club one year and were upgraded and used it maybe twice during our 8-night trip.
Where resorts come in handy are with the crowds. A big hotel with a lot of people could mean long waits for the bus, which makes it harder to get to the park for rope drop and at the end of the night when you wanna just get home and sleep? You're standing in line for the bus waiting. And just when you think you'll get on the next bus? Two wheelchairs show up and you're stuck waiting longer. Just something to keep in mind. A resort with the skyliner may be worth grabbing or pay a little extra for a preferred building closer to the main bus terminal.
As far as decorating, we never really did anything crazy, but people do. We'd bring a few paper window decorations and clings from the 99-cent store mostly because we didn't wanna lug heavy stuff in our luggage. In today's day and age, it's probably way easier. You can probably get a tiny tree delivered with your groceries now or send stuff to your resort through
amazon and have it waiting for you.
Oh yea... that's another thing. To save space we almost always send toiletries down in a box. The box arrives around a day or two before we get down and is waiting for us at checkout. You can do that with Christmas decorations and gifts, too.
Gifts
Can't speak to this, as we never exchanged. Our trip was our gift. My mom would usually buy us a souvenir since she's a softy.
It's not just about the parks
That's the thing... it's crowded, but it's not
just about the parks.
We've had nights where we go to Disney Springs and see the Christmas Tree Trail.
We do a monorail crawl and stop at each of the resorts and tour the lobbies.
We do Wilderness Lodge and AKL, which IMO are the two best decorated resorts.
We take a break from Epcot and go to Yacht, Beach, Boardwalk, Swan and Dolphin.
Fort Wilderness does a carriage ride, and many of the campers decorate their campsite. Really cool to do one night.
Take an Uber over to Gaylord Palms and do the ICE walkthrough
The Parks/The Crowds
As I mentioned above, there's more to do than just the parks. Of course the photos of crowds at Disney could make you anxious, but when you consider all the things outside the parks, it's really an amazing destination.
If you plan right (or close to right), you can have a great time. Personally, I'm a big fan of getting in for EMH or morning rope drop, getting a ton done, getting in a few FP+ from 10am-1pm, then heading out for the afternoon. It honestly doesn't get overwhelmingly crowded until ~11am. That's when you really notice the crowds and wait times start to skyrocket.
^^ For example, we used to do Magic Kingdom on Christmas Day. The park would open at 7am for EMH. We'd arrive by 6:45am. We'd do Space Mountain, Buzz Lightyear, PeopleMover, and get photos in front of the castle all before the park opened to general public at 8am. Then we'd do less popular rope drop rides, like Pirates, etc. We'd have a FP+ for Thunder Mountain, 7DMT, and Haunted Mansion (since my mom likes that the most). We'd do a parade, castle show, and leave by 130-2pm for the day.
Park Hopper is your friend. We'd usually split up Epcot and DHS to make the most of it, as without FP+ you're gonna spend a lot of time waiting in line.
So one day we'd do DHS in the morning, then Epcot at night. We'd do:
Tower of Terror FP+
Rock n Roller Coaster FP+
Toy Story Mania
Then we'd take a break at the hotel, then hop over to Epcot in the evening either after dinner or to grab dinner, and do the nighttime show and have some snacks around the world.
Another day we'd do:
Dine around Epcot in the afternoon.
~ Quick break at the hotel ~
Head to DHS for FP+ and nighttime entertainment:
Slinky Dog Coaster FP+
Tower of Terror FP+ (different experience at night)
Rock n Roller Coaster FP+
Obviously this changes now with so many more offerings and different tiers... But this allows us to see and do everything. Another day we'd do Frozen at Epcot and Spaceship earth FP+, but with construction going on I wouldn't waste my FP+ there
Okay, the pros and cons...
Pros
It's the most amazing time to visit Disney. Seriously. You'll read a lot of negative posts about the crowds and cost but there's a reason why we kept going back. Yes, it's crazy crowded during normal times, but the parks are just infinitely more magical during the holidays. And the holidays last longer at Disney. Especially as we get older, it can be hard to find time to enjoy with one another, so having the holiday last days after just keeps the magic going.
Tons of holiday snacks and food - Disney always brings the heat with snacks and holiday offerings. We usually just do a day of eating at Epcot alone.
The decorations are incredible. Do a monorail crawl and go see all the MK resorts. Grand Floridian is probably the best on the monorail. The Wilderness Lodge is the most Christmas-y. Animal Kingdom Lodge is a close second.
With kiddies your travel habits are gonna be different than ours. Having been so many years and being older, we were okay skipping the parks on certain days or in the afternoon and hanging by the pool or doing Disney Springs.
As my mom would say: "no cooking, no cleaning, no worrying about gifts." Even as we were cooking for our small 3-person Thanksgiving, my mom looked up and was like "Disney was expensive, but man, at least we didn't have to do dishes."
The Cons
Most expensive time of the year to go. Some would argue you can go earlier in December and experience Disney during Christmas, with lighter crowds... but like you said... beggars can't be choosers. it's tough with school breaks.
The crowds make it difficult, but who knows what capacity will be like in 2021 (praying it's back to normal) and if you plan your day right and temper expectations you'll be fine.
As I mentioned above, it's gonna be expensive to fly.,.. especially this year when airlines will be looking to make money and demand to travel will be at an all-time high if things clear up.
There's uncertainty. I'd love to tell you to book a DVC and save some cash. Heck, I was looking at doing that as we plan on returning in 2021, but you can't chance booking it and losing out on the money.
It could be tough with young kids. They wanna see everything, they wanna do everything, but Disney is PACKED and it's hard to see and do everyting. I wouldn't recommend it for first-timers, unless you really plan on going back at some point. You're gonna miss out on a lot of things. That's just the honest truth.
Don't go if you want a traditional Christmas. We always went under the assumption that this was our escape from normal Christmas. No cooking, no cleaning, no worrying about seeing everyone.
That's all I can think of now. I will add more if it comes to mind.