The characters come out all around the Sorcerer's Hat and just past that... at various timed intervals... Mickey appears in his sorcerer outfit (so I'm told -- this is one place we have never seen live Mickey -- we weren't really looking though) -- we DID see Pooh and friends and what was different here is we saw characters in pairs actually -- so one line for two characters... such as Minnie and Pluto together, Donald and Goofy together, etc.. also so Rafiki, King Louie and more....
Honey I Shrunk the Kids Movie Set Adventure is a fun playground type of place your kids would probably like. I believe it is closed until July 9th though.
Muppets 3D Movie is good too -- for 3 yo at least.... not really scary at all as I remember.
My kids absolutely loved the parade here too. The characters come out in convertibles decorated in various themes. We like it better than the MK afternoon parade.
We haven't tried the Indiana Stunt Show so I don't know how kids would like that. And while we took the little ones on the Great Movie Ride, but it's likely to be scary for the little ones. It was a bit scary for ours.
Since a lot of the things you'll do at MGM require sitting and watching... make sure you plan time for the kids to be active too. Playhouse Disney, as you know, they can get up and dance... but the other shows are more sit-down.
We just returned from a trip with a 5, 4, 3 and 22 month old -- they liked MGM a lot --