as much as i love AKL, i think i'd go for the dining plan. this will be our first time using the dining plan and i'm looking forward to not having to worry about paying the bill, and being able to order anything, instead of maybe going for the cheapest thing just to keep the cost down.
having said that, are you the type who spends all day in the parks, or do you like to relax in the hotel?
if you plan on spending all day at the parks, i'd say go for the cheaper hotel and the dining plan.
but if you like to relax in the resort, i'd say go for AKL. everyone should stay there at least once, its an amazing place.
is your booking part of a package or a room only reservation? (i'm asking because of the difference in cancellation policies).
if you're part of a package and you've paid money to disney already, you'll be tied to your existing reservation, or maybe changing it, otherwise you'll be charged a penalty fee.

if you're on a room only (much more liberal cancellation policy!), have you thought about renting DVC points? we're doing that for the 4 nights before the cruise, we're renting through a DVC member i found over on the rent/trade boards on the DVC section of the disboards. the 4 nights at AKL is the same price as 4 nights at all star music. we're then paying to add the dining plan on (payable on arrival).
i've just checked the points chart, for this i'm assuming that its for 3 adults (i know you mentioned it was you, DH and one child because the other two were on service?).
for the 3 nights, you would need to rent 33 points for a savannah view studio (sleeps 4). points rent for about $10 a point, (you can get cheaper at times, but it depends on the renter). so that works out as $330. adding 3 adults (not sure how old your son is, he may qualify for the childs dining plan, but i thought i'd put him down as an adult) on the dining plan works out as $359.91 for the 3 nights. this is payable on check in at the hotel.
total price is $689.91
so you could have both the dining plan and the AKL.
if this sounds like something you may be interested in and you need any more info, i'd be happy to help.