We love to go on Christmas Day. We like to tell the CM's Happy Holidays it makes them light up and makes the day a little more magical. It is not as crowded as the 26th-31st. The 31st is completely nuts!
We make sure that we are there early and hit DL at opening. I usually send my DD to get fastpass for Space Mountain and the rest of us go to the Matterhorn, then straight to Fantasyland and then to New Orleans and Frontierland. When DCA opens we go over there, it is less crowded. We stay there until 2 pm or so and then we leave the park for a late lunch/early dinner. We are back around 5 pm and go back to DL. We go to any rides we have missed or have fastpasses for or that we want to repeat. We are usually able to ride every ride in both parks and still see the fireworks. My DH usually goes and saves a spot for us for the fireworks and I take the kids on the mountains because he hates roller coasters. He likes to take a nap in the middle of Main Street, USA, after they have closed the vehicles in prep for the fireworks.
Yes there will be crowds, but it is doable and can be fun. Just remember that it is a vacation and some lines will be longer, use fastpass as much as possible and have fun!