The party will be sold out that night and very crowded. I would eat your TS around 2:00-3:00 and plan on getting to MK as close to 4 as possible. Don't wait too late to grab CS food as places will sell out of food that night (we've had it happen to us twice now because we waited too long to eat). Expect long lines at the CS places that are open.
The 2nd parade will be less crowded than the first. I agree, the parade is a must do for us every time. The fireworks are special but its also a great time to get shorter ride times so you have to make the call on that!!!!
You need to decide if you are riding rides or participating in the party events. You can do a combination of both but you won't get all the rides in plus do the events. I saw on another thread that your time at WDW is limited so you will need to decide what you want to do. Character meet and greet lines get very long so you need to choose those ahead of time and be in line early. The 7 Dwarves are only ever at a party so it's going to be your only time to meet all of them.
If you are going to MK on a different day also, I would skip Splash Mountain as the water cannons are not on during the party and the ride isn't as fun. Definitely do the Haunted Mansion as the extra outside effects are great.
Trick or treating is fun but the candy isn't anything special and in your case with limited time, I would probably skip. The younger travelers in our group love the dance parties so you might consider splitting and allowing the older ones do do some of the bigger rides while the younger ones do one of the parties.
