I haven't been to Hoop Dee Do, but we did the Fantasmic Dinner Package. Depending on the time of year, it isn't necessary to do the package to get good seats. I know that when we went (Memorial day last year), we were at the reserved seats and the same seats on the other side were empty when we got there! It was not a good deal for us and we won't do it again.
My little ones weren't afraid really. We had discussed some of the things they would see and said it was all a dream. I also told that at Disney World the good guys ALWAYS win. Bad stuff can't happen to Mickey. My youngest kept saying, "Mickey always wins, right mom?"