Having just done this last week, I highly recommend doing the dinner package. If you don't, you will have to get in that line REALLY EARLY to be assured you'll get in, since they are only doing Fantasmic 2 nights a week. They even recommend those with the dinner package should arrive 45 minutes to 1 hour before showtime now! We found the reserved seats to be in a great location - we could see just fine, plus we were some of the first people outta there at the end, which is a big plus. That mass of people exiting is the worst part.
We did Mama Melrose. They've changed their menu again since last time we ate there, and we thought it was okay, but not great. The service was slow as well.