Yes, your 5 year old will love it. We've done it twice. In 2006, we had the Fairy Godmother, and in 2007, we had Alice. You go into the theatre near Main Street (near Tony's on the right hand side after you enter the park), and the character reads a story to the kids. They sit up front during the story. After the reading is done, there's time for autographs and photos. It's a very nice, relaxing experience.
You need to make a reservation in advance. They will not allow anyone without a reservation or the voucher in, and they do check everything pretty carefully. There are probably only about 20-30 people in the theatre for each storytelling session, so again, you need to call ahead to get in.
They also only offer this on a few days a week; when we went, it was only on Mondays and Thursdays I think, and I'm pretty sure it's not offered on days when there are special events like the hard ticket parties.