I have seen my fair share of AIE shows and have participated in the audition process. I have also spoken to several of the cast members in the area. Here are a few tips for those that are serious about it.
1. Arrive early. If you have the opportunity to audition in front of the park at rope drop - do it. Auditioning there does not inhibit your ability to audition again in the facility. It is the only way you can audition twice in a day in hopes of making it to the producer.
2. Audition first thing. As others have stated, there are a finite number of spots available per day so auditioning early only increases your chances. The cast also seem to be in a slight rush to get that first show cast as they need to have those individuals selected by 10 am to get them ready for the 11 am show. Also, this will give you the widest selection of songs - as songs are pulled from consideration as they are cast in the shows.
3. Know the park schedule - if you truly want to greatly increase your chance of getting on the show and then winning, know the crowd level of DHS and how EMH and Fantasmic performances affect it. By auditioning on a "slow" day, you GREATLY increase your chances of making it onto a show. Granted the crowds in the theater wont be as large but your playing the law of averages here. Avoid days that Fantasmic is playing as it greatly increases the total attendance of the park. Also avoid EMH morning days as there is a higher initial volume of guests early in the morning (the time when auditions are held). Do try to hit up days with EMH evenings as a lot of the crowd does not arrive until later in the afternoon as the auditions are wrapping up. Also, the day AFTER EMH evenings at DHS is a great day to audition (regardless of whether or not Fantasmic is playing) because crowd level is crazy low the morning after.
4. Biggest tip for those ages 14-17 who want to audition - Make sure you are with someone older than 17 and make sure there is someone to watch younger siblings if you have them. That means you need two adults... one to go with you and one to be with the rest of the family. The cast is strict about the one support individual in the audition facility rule.
5. Be prepared to surrender up to 4 hours of your day for the experience. That is about the amount of time it takes to go through the audition, show prep, preliminary show, finale show prep, and finale show. Dont let this stop you from enjoying the rest of the park though. Make sure the rest of your family understands how to use fastpass. Also, identify other things you definitely want to do (like TSM) and have the rest of the family do things your not as interested in while you audition.
6. Make sure you have some way of communicating with your family - either by cell phone or nextels or other device. This will allow you to quickly meet up with the family no matter how far you make it through the audition process.
The rest of my tips all have to do with song choice - because it is probably the single most important factor (besides sheer talent) to actually winning the dang show.
4. Know your place/style and stick to it. Don't try to be something your not and definitely choose something you are comfortable with singing. Don't let the producer bully you into a song that you don't want to sing. The producers are looking for a diverse show, so they may try to push you into a song that better suits the entertainment value of the show. They dont want you to sound bad... but they also don't want 3 female country singers in one show. Go early, and allow yourself to dictate what song your going to sing.
5. There are definite power songs. Meaning - when sung well, they have the notorious ability to defeat other well done songs. If you can identify and sing well one of these songs, you have a definite chance of winning over the audience. Many of these songs have the ability to "belt it out" which can really show off the voice and win over the crowd. Examples include Go the Distance for guys and Reflection for girls (notice that both of these are traditional style Disney songs... hmmmm.... wonder what a Disney crowd would like... hmmmm).
6. If you are wanting to win, avoid up-tempo or party songs - stick with ballads or mid-tempo stuff. Why? Because they better show off the voice and that ultimately wins the competition more than showmanship. Also, you can take more vocal liberties with the slower variety.
7. Only sing a song from the disco or latin sections if you are there to have fun and don't really care about winning... because you wont. Also, any current music by a Disney star should be avoided - the songs just dont compete well against stronger tunes.
8. If you are female and can truly pull off R.E.S.P.E.C.T. - go for it. Because you will win. But you have got to BRING IT. Otherwise the crowd will turn on you. And they only want to hear that song done one way - and that's Aretha style. But man... if you can bring that soul and growl... be prepared to have the crowd go crazy.
Hope this helps.