Yes, that is an issue.
Speaking of that area though...on that other magical wdw forum, there was a lot of discussion regarding the major bottleneck between Peter Pan and IASW...there's been some rumors that maybe the IASW entrance could be totally re-arranged.
The entrace area is actually a separate unit from the main building, as you can see here:
http://maps.google.com/maps?q=disney+world&oe=utf-8&client=firefox-a&ie=UTF8&hl=en&hq=Shades+Of+Green&hnear=Shades+Of+Green,+1950+Magnolia+Palm,+Orlando,+Florida+32830&ll=28.420665,-81.581941&spn=0.001861,0.001773&t=h&z=19
The idea is (maybe) they would move the entrance a bit off to the back area between the old skyway and the side of the ride, although I think that could also potentially effect the Pinocchio House restaurant.
Either way, I think something should be done in that area, because it really does get very cramed sometimes.
Does anyone want to guess what the sitework is about between the road and the railroad tracks? It looks like the same type of earth-moving equipment being used where (presumably) Ariel is going is being actively used there as well.