Hey Denise~ we watch it right outside of Star Tours. It is where the parade starts from.
last year we got there at 2:30 and I went over to the backlot express and got the kids icees to drink while we waited. We had a great time and when it was over we went right on Star Tours.
If it runs the same route as the "Stars & Motorcars parade", we stood on the curb at the very, very end of the route. Right where they open the gates for the cars to go into. We did not have to "stake out" a place and had tons and tons of room. It was a great place to watch from and near the front entrance as I recall - it was 3 years ago.