Yes, you can stand in the back outside the theatre. If nobody is in front of you you might even get an ok view, and you'll hear everything. That said, this show should be enjoyed from a seat inside the theatre.
You can get a seat without a dinner package. How early you have to line up depends on when you are going. Which week, day of the week, show time.
We were there the week after Thanksgiving. That week, at least the day we waited on line, we got on the line 20 minutes before showtime and got a seat. Yes, people had been on line for A LOT longer. We saw people on the stand by line over an hour before the early show, and I'm sure that wasn't necessary. If you will only be in Epcot one night, it's worth investing some time in line, but if you'll be there more than one night i'd wait until closer to showtime and jump on the end of the line.......unless you are there on a weekend or close to Christmas.