Carol and I try to make it to the Blue Bayou each time we go. We love it! Yes, it's a bit pricey, but the service has always been good and it's a nice quiet setting. Of course, we usually go for lunch.
It's certainly not a place I would take kids though. I don't think they'd find anything they liked and you'd be paying quite a bit for something they most likely wouldn't appreciate.
We are staying at WDW the night before.
We have done both. It's nice to relax the night before. Grills is nice for dinner on the water or the pizza place next to the Raddisson has really good pizza.