There is a cap of people allowed for the Halloween party, but I don't know what that cap is. When we went to a Friday party in mid-October 2010, I found it surprisingly crowded. I'm sure if you planned well you could find ways to avoid the crowds, but I had been expecting near-walk-ons for popular rides. Instead, it was at least 20 minutes for Haunted Mansion Holiday, I think longer than that for Ghost Galaxy, and the line for Big Thunder Mountain Railroad seemed longer DURING the party than BEFORE the party (we arrived at 4 and got FPs for it early in the day). If I recall correctly the line may have even been out of the queue during the party, which is crazy for a fast-loading ride like that. At the end of the night we got in line for Peter Pan's Flight and ended up waiting almost as long as you would've waited getting in line right before midnight on a non-party day, from what I understand.
We did wait for the Jack Sparrow meet and greet, and that took probably close to an hour of party time (with one of the two people in front of us repeatedly saying how she hoped that they switched over from Jack Sparrow to Peter Pan right when she got up there so she could get pictures with both! never mind the people right behind her, LOL

). We did get to meet Jack Sparrow but I was tired and with the flash and my make-up my pictures were truly awful.
Candy lines were long and slow too. It was difficult to get a good spot for the fireworks on Main Street--from reports I'd read of low crowds I'd expected we could just walk to the hub at our leisure and get a good place to stand. In reality, the crowds to even get to the castle felt as bad as when there's a big parade or Fantasmic! lets out. We had allowed what I considered ample time to get to the area and almost didn't find a place to watch the fireworks in time.
Other people's experiences varied substantially from mine. In fact, my brother and his wife and friend (who ditched our slower-moving party right away

and weren't interested in meet-and-greets or fireworks) thought the party was great. And they didn't even dress up!
I do think I got spoiled by my previous two trips occurring with very low crowds (like...20-30 minutes to get on Space Mountain). We were also pressured in that we only had the party day and then the following Saturday to do everything we wanted in the parks (short trip). But I was disappointed in the crowd levels. The fact that parts of the park (including many eateries) are closed means that the 18,000 (?) people is a MUCH more crowded environment than if the whole park had 18,000 people during regular operating hours.
Al Lutz reported (whether rightly or wrongly) that for the last couple parties of the year they allowed MORE people to come in. So conditions could be even more crowded than I experienced. I'd probably do the party again someday just because I like dressing up; in fact, if I were local, I'd try to do it every year! But I would probably avoid meet and greets (maybe do Princess Fantasy Faire, which I heard wasn't crowded by the end of the night) and wouldn't plan on short lines for ANYTHING. A Tuesday night party will probably be less crowded than Friday night.