I applaud your efforts, and Disney for Christmas is a magical gift! Let me emphasize that! I think you'll be amazed at what Disney has to offer! The DISboards is, IMHO, a great place for WDW info!
Here are some of my thoughts: One thing you will want to mentally prepare for is the crowds. I've never been during Christmas week, but I understand the crowds are pretty heavy. I've seen them under other heavy times, and the crowds can get to the best of us at times. When you are walking through a really crowded area - hold hands. Have a plan for what to do if someone gets seperated, and update that plan as needed. Plan on using a stroller for the five year old. Even if he doesn't really use one any more in daily life, Disney is all day walking.
Try planning a few breaks into the mix, like lunch at the Poly or the Contemporary (on a MK day). It doesn't have to be an expensive lunch, just plan a little break from the noise into some of your days. (especially your MK days) The Polynesian is a nice quiet place to walk around, and it is only a short monorail ride from the MK. GF is also relaxing and has an inexpensive place to eat. From Epcot, you can take a break via the back exit in the WS, and head over to the Boardwalk area (pizza). Your family might be the type that enjoys non-stop marathon days, but most people enjoy their stays more when they have a little quiet time. Disney is amazing, but it can be sensory overload, especially for a first timer. It's sort of like visiting the cathedrals of Europe...after a while, all the Mary and baby Jesus paintings start to look alike. If you take your time, you'll appreciate the details more. If your kids (and adults)are well rested, they will enjoy themselves more. Do use FASTPASS, but also take the time to notice details in the walkways and gardens around WDW, rather than rushing to the next ride. I also wouldn't try to schedule your time too much. It will only lead to frustration. It is smart to have a general plan of the rides you most want to visit first, and think about show times when you get your park maps, so you know what direction you want to go, but don't try to predict every moment of the day.
Most important - allow yourself to be a kid again! Try to see the rides and characters through the eyes of a child. Do something silly, like eating ice cream for breakfast
Another thing to consider...and maybe you are too far into planning a Christmas trip...but one thing to consider, is that it might be cheaper to go in February if you are on a budget. Food prices won't change, and it sounds like you found an inexpensive hotel room, so I don't know how much you'll beat that price no matter when you go, but you could probably get a good airfare deal in early February, and you might even be able to stay on property for part of your trip. (If your kids get a February break during president's week and you're able to START your on-property stay by the 15th )
Last, have you considered how you will get from the airport to the hotel? If you are staying off-property, you'll probably want to rent a car. If you stay onsight - at least for this year, you wouldn't need a car, you could use Disney's ME service and use Disney transportation to get around while you are there, which would considerbly offset the room price. (But room discounts for that time are ending soon). You might also get a considerbably better room rate at WDW if your stay starts on the 19th of DEcember.