We went to Ariel's grotto just last friday for dinner. Overall we liked it. I would agree that the food was average and nothing special. However, table service was pretty good and much better than the buffet at Plaza inn we had the same trip. The character interaction was pretty good. We saw, Mickey, Minnie, Goofy, Pluto, Chip and Dale, and I think there were a few more. They came up to our table many times and even led the chidlren away to an area (within sight of our table) for many dance activities (limbo, etc.) They also paraded around the restaurant with the children. My daughter (age 3) loved it! It was the only meal we had during the whole trip that appeared worth the money we paid for it! (again, more for overall enjoyment, than for fantastic food). With table service, I was even able to sit at the table and somewhat enjoy my meal (although my husband and I took turns following our daughter as she danced around with the characters).
I would definitely recommend this for dinner. We did not even have priority seating and we did not have to wait too long for a table.
Lisa