Yes this can be done. We did this in January for my parents 40th anniversary. It was a total of $220 + a tip for the driver.
Here is a link that explains the pricing.
http://www.wdwinfo.com/recreation/fireworks.htm
The decorations consisted of balloons and a banner (i think).
The cake was chocolate with white icing. It was more than enough for the 9 of us and was wonderful - except they cover it in fondant and that's not the tastiest thing, so we didn't eat it. You can also get it white cake and chocolate frosting or white and white or chocolate and chocolate.
Sodas & water were also available, too.
Yes, you use the -407-WDW-PLAY number.
We had a wonderful time. One thing I recommend is that you have your parents sit in the front, opposite the driver. Even though the whole boat has good seats, my parents sat on the same side as the driver and they had to kind of turn to see what was going on. I sat on the opposite side and the view was great. Once tie up for the show, if you have anyone in the back, invite them to the front, it's harder to see everything from out back.
Also, here is a link to the IllumiNations thread. Even though you won't be sharing it with other DISers, it has great info on how to call.
http://www.disboards.com/showthread.php?s=&threadid=560160
And actually, when I called, the reservationist told me to say, the date, IllumiNations cruise, and party of ??, when I tried again the next day. She said they understand when you have to cut them off. I know some people get the "there is no IllumiNations cruise" speal, but I didn't.
If you have any other questions, let me know.