Some suggestions to save money:
We went the week after Thanksgiving and we were able to get free dining. The week before Thanksgiving had the free dining offer, too. If you do the last day of the free dining offer the week before Thanksgiving it can include Thanksgiving week. Your start date has to be in the free dining window, but the other days don't and you still get the deal for the whole trip. You will have to get park hopper tickets for the free dining which will cost extra, but then you can park hop.
Next, do a value resort. POP Century just got remodelled; so, the rooms will be on the new side. Your kids are at a perfect age for this resort.
Crowd control:
With regards to the crowds your three advanced fastpasses will get you on your must do rides. Book those in the morning and then keep trying for extra fastpasses through the day. Don't be so fussy on the fourth, fifth, and so on with fastpasses you can get. Grab what fits your time slot.
Absolutely, use the extra morning hour everyday. This worked perfectly for us. MK actually opened at 7am for their extra magic hour. We accomplished a lot during that first hour. Then, work your way toward the back of the park and you will get a little extra time there before the general crowds come in. We did lunch usually for noon to 1 pm. Then, we searched for another fastpass and did it after lunch. Finally, we took a break at the top of the crowd level time and left the park. For the evening we went to another park which was not the extra magic park.
Starting with Thanksgiving week, you can see many holiday shows. Most of these shows are easy to do except for Candlelight Processional. Enjoy the Christmas storytellers in World Showcase. There's a gospel group at the fountain in Epcot performing. Illuminations has a special Christmas ending. There's
MVMCP. Hollywood Studios has a couple of Christmas attractions, too.
There is street entertainment like DeVine in AK which your kids would love. There's over a dozen street performers in the parks. You don't have to do all rides. The regular shows like Beauty and the Beast are easy to get into without a fastpass. You won't get the best seats in the house, but you will see a show.
I was so surprised how much we were able to do, but you have to be willing to get up early. A few nights we didn't go back to a park for the evening; so, we could get up early and get to the park at 7 am.