If you book AT through SW it looks like the baggage fees are waived... is this true?
Yes, currently the system is a bit odd in that you don't have to pay baggage fees for AT flights booked through SW, but the tradeoff ends up being the inability to choose seats ahead of time.
I've flown AirTran a couple of times from PHL-MCO, and I've generally been happy, but feel that they have gone downhill a little bit over time. When we flew them earlier in the 2000s we were really impressed. Then we flew them again on Christmas Day a few years later, and the flight, while on-time, was just ok (the service wasn't great, but it was probably just because no one wanted to be working a 7AM flight on Christmas). I recently flew AirTran to another destination from PHL and was actually pretty disappointed on that trip. The plane wasn't in great condition, the in-flight staff was just ok, and the staff working in the airport were downright rude for no good reason.
Overall, though, AirTran has been fine and prices have always been good, which is my main concern. Plus, they're definitely no worse than any other airline. I just wouldn't say they're a standout in terms of being any better than the rest. I've had similar experiences with Southwest. I felt that they were great when they first started flying out of PHL, and since then, more and more, I've had less than stellar experiences and flight crews here and there. I'm relatively indifferent between flying AirTran vs. Southwest.
If the price is right, I'd definitely choose AirTran, but I think it's somewhat hard to say what to expect. I'd say you should go into it with the attitude that it will be "ok", and you'll be setting yourself up to either have your expectations met or have a pleasant surprise. We're flying AirTran on our upcoming trip to MCO, and I'm hoping to have good things to report!