These are fire occupancy rules talking, not just someone who wants to ruin your vacation.
In this case....not really. Not that somebody is trying to ruin their vacation, but a DVC 1BR villa 'sleeps' 4, and that is the max that Central Reservation/Travel Agents must abide by, not necessarily for fire occupancy purposes. Why do I say that? Well, while a DVC 1BR only 'sleeps' 4, DVC Member Services will accept a reservation for 5 in a 1BR. So, obviously it doesn't violate fire code to have 5 people in the room.
As others have pointed out, only having a reservation for 4 leaves you one room key short. Wouldn't matter for fastpasses because you'd buy a separate admission ticket. But it would matter for Extra Magic Hours. Not really morning EMH as they don't scan room keys for entry and if you flashed them 4 they probably wouldn't even know. However, for evening EMH they do scan room keys before issuing a wrist band. That said, it's not like a 3 year old is going on too many rides where they will get checked, and with a group of 4 others who all flash wrist bands it really wouldn't matter that you didn't have one. Theoretically, if you were discoverd to have more people than your reservation, you could get in trouble or be required to pay for a bigger room. Realistically, that will never happen.
One real impact would be if you were planning on doing the Dining Package as you wouldn't be able to get it for all 5 people.
One potential solution to your problem would be to scrap the reservation through Disney/
Travel Agent and rent yourselves some DVC points. On this discussion board, over in the Disney Vacation Club section, there is a Rent/Trade board. If you were comfortable with that process you could contact a member over there and try and secure a reservation that way. If there is availability for a "points" reservation (do note that sometimes rooms are avilable for "cash" reservation when they might not be available for "points" reservations due to inventory rules) the member would be able to secure you a reservation for 5 in a 1BR villa and you'd probably save a decent amount of money on the room. Keep in mind that in obtaining a reservation this way you lose a lot of flexibilty as far as cancellations are concerned. You'd also be able to add the Dining Package. You could buy admission separately, but that's ok because the WDW packages don't include any admission discount. Our family of 5 (kids 9, 6, 4) just returned from a stay at BWV in a studio. Via Member Services you can get a reservation for 5in a BWV studio, with a request for a "studio plus". BWV is the only location where this can be done through Member Services. So if you went the DVC route that might be an option if cost were more important then space. Not as much room as a 1BR, but quite a bit cheaper and doable if all three kids can sleep in the same bed, which ours do when on vacation.