Since you have 7 nights, I would say that splitting it up would be a great way to do things.
I'm of so many minds on the subject that it's had to get ahold of it all! I seem to have complicated algorithms that I go through for EVERY stay, to see what would be best and more right for each time we go.
But...just like if I were going to Australia I might splurge if I could...maybe you should go with your dream. Even if only for half of the trip.
If you do split it, be sure to time the onsite stay so you can get as many Magic MOrnings as possible! It's on the T and S days, so if you stay over a weekend you could get both S days at least. If you were move from your other hotel early-early on an MM day to check in, even if you don't get a room assigned, you can have them hold your luggage and get over to MM.
On our first trip that was longer than a day, we started with 3 or 4 nights at PPH. Then we moved to HoJo (before the water play area was made), and we liked HoJo more. But...we were walking the wrong way, and that caused a MUCH longer walk than you should have.
For me, the walk from DLH, and from PPH if you follow their signs instead of dis instructions, is so dreadfully long for two reasons. One, it's loopy instead of straight (I hate that). Two, it's nothing more than a mall to me. And I despise malls....hate 'em! Two-A, my son and husband looooooove malls, and love to shop! They hate to window-shop; if they see, they want to buy, and if big evil mean princess Molly says "no money to get that!" they pout. Two-A is a big bad one for me. So you can see...anything that takes me into DownTown Disney (despite the fact that Haagen Dasz sells Peets coffee iced lattes) is generally negative for me.
That said, and despite the fact that our pixie dust wallpaper did NOT glow, DLH was quite nice, and PPH is fun! Once DS got over his disappointment that he was too young and too bad of a swimmer to go down the big slide, and that the pirate ship is just for show, he liked the pool and I liked watching him. PPH has been fun for us (though it was where DS and I were when I saw the news about Michael Jackson and Farrah Fawcett, so it might be tinged with sadness for awhile for me).
But it has to be a serious value to MY pocketbook...not to yours or someone else's, only mine...to stay there. We only stayed at DLH, and on that stay we did the whole concierge thing as well, because we used "bonus" points with our brand new DVC purchase. Until a few days before our trip, our room was valued at over $400 per night, and I don't thikn I could even do that at the fanciest hotel in NYC....and definitely not at Disney. That said, someone else with a different bank account and different values would be fine with it. My SIL paid for a night at PPH during a recent visit we made to her and my brother, and when I told her that I'd stay at PPH at $x instead of the hoped-for GCH, since GCH only had a suite that was over 1000 bucks for ONE night...all she said was "I'm glad you didn't choose the suite". But she didn't tell me to NOT choose the suite...and as long as her nephew enjoyed it she would have felt it money well spent, but she was glad I didn't do that.

Different value-for-money brains.
We are paying the difference this time so that we can enjoy the Neverland Pool one time.
Plus, I have never been at a hotel that uses a monorail.
Just making sure (and if we've talked about it before forgive me, I almost never remember who asked what...I once answered my friend on here, on another board, without even LOOKING at her username there, and felt quite silly when she knew who I was! silly me!) you know....
There are limits on who can use the big slide, including needing to be a swimmer.
And the monorail is actually in DownTown Disney...the hotel used to be built up to the monorail station, but they took all that away when they built DTD, and now it's beyond Rainforest Cafe and ESPN Zone. It's not right from the resort. And since it only goes from there to Tomorrowland, you'll need to time your breaks so that you're naturally in Tomorrowland, or there's a lot of extra walking.