We did August 2 years in a row and are going back August 2007. We were also very nervous about our first trip, however, it is not as bad as you might think. First of all August in New York where I live is just as bad if not worse. Secondly, you will be dressed for summer, and drink lots of water throughout the day.
The only downside in August is you really have to pace yourselves. We would get an early start and head to the parks, then around 2:00 we would go back to the resort and take a pool break or nap. At around 4:00 or 5:00 we would go back to the parks, sometimes later. Once the sun goes down it really wasn't that bad.
The only park I found was unbearable was Animal Kingdom. There really isn't enough air conditioned gift shops to take shelter there. We had to leave early because the heat made me ill that day. However, in EPCOT, Magic Kingdom or MGM if you really start feeling bad from the heat, just go into a gift shop for some air and that really does the trick.
I also was unable to watch the pardes, because it was just to hot to stand around. But, I saw the nighttime spectromagic.
If I had my choice, I would not go in August, but I don't so I make the best of it. It is doable, but at a much slower pace. Also, count on about a hour rain shower every day around 2:00 to 4:00. You can almost set your watch to it. Definitely plan on going to the water parks, they are crowded, but fun in August.