we ate there in November 2012. I would say about 1/2 the girls under 12 were in some form of Princess garb (some of them it was just a princess t-shirt, or a non-BBB tiara, like even the cheap birthday party tiaras.) I think you'd have to know your own kids...would they feel like they were "cheated" if they don't have a princess dress on? Do they already have a dress they could bring along in a backpack? Would they be happy with maybe getting to wear make-up & an "up-do" with hair glitter that you could do yourself in the hotel room?
I would recommend making your way around to the back of the castle by 7:15 if wishes is at 8:00. (the entrance for the restaurant is at the Fantasyland end of the castle) They will let you across the rope if it is already up but the bigger issue sometimes is trying to get across the crowds of people who line the hub for the coveted parade & fireworks viewing spots...that can be a real challenge. If you get back to Fantasyland early, go see Philharmagic, shop or ride It's a Small World until time to check in to castle. Better to be in the right place early than fight the crowds!
As far as being able to see the fireworks...the answer is maybe...depends on where you are seated in the castle. And if you are seated on time. You may get checked in and then wait in line inside the Cinderella picture-taking room, which would be no-view of the outside. Or you may be seated at one of the side table areas in the castle, with little view. There's only a few actual window tables and there's no asking for them...it's just pure luck. The only time I've heard of anyone actually requesting and getting the window seats is for something very, very special like a 50th wedding anniversary, or an engagement that's going to happen during the meal.
As for the food, we all enjoyed it (party of 4 adults) This was the 3rd time we've eaten in the castle in 3 years with 6 different adult guests, all different kinds of taste in food...we and all of our guests have enjoyed the meals every time. Here's my take on it: the meal is very expensive as far as a usual restaurant price goes...and some people expect the food to reflect that high price. But you're not just buying food when you pay that price. We always figure at least 1/2 the price we pay is buying the chance to eat inside the castle with the princesses (and you're getting a picture portfolio with Cinderella, and the gratuity is included in the price.) So looking at it that way, we expect good food, but not gourmet special stuff. And so far, we think we've gotten $25-30 food from the $50-60 per person price...just what we expected.