For timing, if you can go fairly early in December, the crowds should be smaller. We went the days following the Cast Member parties (I think the parties are the first Monday and Tuesday after the first weekend in December?). It appears the parks were open later that Wednesday and Thursday, and Fantasmic was offered, just because
Disneyland itself closed early on Monday and Tuesday. Crowds were low on the weekdays, good on Friday (but it was sprinkling rain) and pretty low on Saturday too (when it DID pour all day). I think it would have been a lot more crowded without the rain, but still a LOT less crowded than Christmas week and the week after. So I'd recommend mid-December for sure!
On the other hand, this year, the Electrical Parade only ran for the peak weeks, so if your heart is set on that you might need to attend a bit later so you could see the parade. (This is assuming they will even run it in December 2010, which is not a given.) I would take lower crowds over higher crowds with the Electrical Parade anytime, but you may feel differently.
If you happen to go on Christmas Eve, be sure to hang out in Main Street near closing, as they have a "Character Explosion" where characters just come out for pictures/etc. for a bit and then get up at the train station and wave goodbye to everyone. I saw some pictures elsewhere and it looked really cute.
(But I still would go well before the vast majority of students are getting off for breaks.

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