We did this just a few weeks ago. We'd never done it before, but I have to say it was one of the highlights of the entire trip for my four year old daughter. Alice and the Queen of Hearts were there, and DD played Musical chairs along with them and about 6 other kids. She loved it! Peter Pan showed up about halfway through, and was up to his usual nonsense. DD had her blanket, and he asked her if she was cold. Then he saw her bear, grabbed it and asked her if the bear could go back to Neverland with him. It was a hoot!
They did pictures and autographs after. Also, we got there about 2:10, and also saw Goofy and Chip and Dale before the Musical Chairs even began. May have been coincidence, but I'll take it!