We just returned home from WDW, and one of the things that really surprised me was how loud/scary Fantasmic was. My almost 4 year old DD handled it pretty well, but there were several times during the show that she sat with her hand over her mouth and grabbed onto me or hid her eyes.
I've never had a chance to see Fantasmic on prior trips and was really looking forward to it, but I was very disappointed. I thought it was too "over the top" for little kids. Granted, most of them around us seemed to do ok, and there was a "happy ending" but it really surprised me how intense it was considering that it's geared toward families.
I guess it depends on your child, but just keep in mind that it is very loud and there are several villians/scary images that are potentially very frightening.