We have done both.
We have never spent as much as you quoted for the Hojo kid suite, so I can't say for sure yet if I would do it at that price. I have seen the prices going up on that room over the last several months though, even with early bookings, so I will probably eventually be faced with the decision.
The time we stayed at the DLH we had a standard room with a view. The room had two queen beds and no daybed. We paid a little under what you are contemplating for the Hojo kids suite per night, and stayed three nights. I don't think I would ever pay $400 per night for a hotel room, but that is a personal financial choice. That aside, we very much enjoyed being "immersed in Disney." The walk through downtown Disney is more pleasant than the Harbor walk. We loved the new style room, the hotel grounds, and the pool (which is now different). That was one of our best trips ever!
That all being said, DH and I are generally more fiscally conservative and find the resort prices really hard to take, especially since we would rather go to Disneyland more often and stay cheaper. We have in the last 1 1/2 ears started to splurge by staying at the Hojo kid suite. We love that there are two rooms and two bathrooms. It's fabulous to have the ability to get away from each other when we have trips longer than 3 nights. My two boys sleep better when they have separate bunks and don't have to share a queen. I sleep better because I don't have to listen to them grind their teeth or thrash around in their sleep. DH and I love that the boys can go to sleep before us, and we can still talk to each other and have the lights on. For a long trip, the Hojo kid suite can't be beat. The walk isn't as pleasant as the DtD Disney walk, but it's not long or arduous either, especially on the Disney side of the street. My boys love the water play area at Hojo although they will probably grow out of that soon. The pool is fine too. Parking is free. Our experiences at Hojo, whichever room we have stayed in, have been excellent. We have only ever encountered minor problems, and they were addressed quickly and satisfactorily.
On the subject of a discount, I have never heard of Hojo not giving at least some discount. Call in-house reservations directly and ask for the DisBoard discount which should be 15% or the AAA discount, 10%, and see if that works. If you were working with a reservation employee on the national line, they may not have given you the best deal available. As for the Disneyland hotel prices, there may be some discount that becomes available in the spring. If you book room-only, you will probably be able to get your reservation adjusted if a cheaper price becomes available.