We took our DS3 & DS8 last year and going again this year. I didn't think the crowds were bad at all, but we go on Tuesday night party so maybe that's why? We got a double stroller for the party last year and that worked GREAT. Anyway, last year was VERY COLD. Bought a blanket and the kids cuddled up and took a nap in the stroller before the parade and during the midnight show at the castle. Yes, we made it the entire evening. For us, the snow was just "ok" at best. Of course, PA has real snow and the artificial (soap?) stuff just wasn't the same. My kids were like "this isn't snow!", but that's ok. We just really enjoyed the festive atmosphere at night and the Christmas parade was very cool.
There was no way my kids would have napped in the afternoon, but like I said, they snoozed some during the party. For me, the bigger planning is making sure the next morning is a "sleep in" one.
If I had a younger child, like you do, I would go and plan on him taking an afternoon nap and a nap in the stroller. I would recommend a blanket for him and maybe a stuffed animal to be nice and cozy and happy. And lastly, take the next morning easy. Have fun!!!