Update: we arrived at 6:00ish for a 6:20 show. We were among the first in the VIP line and actually could have gotten in the Orchestra line without the VIP passes.
re: where to sit. Everyone has their preference! I prefer to sit in the orchestra - you can't see the magic carpet ride as well (since it is mostly directly overhead) and the procession goes behind you at times, but I still like to be closer up to see the actor's facial expressions. I have sat on every level in that theater and I don't think there is a bad seat in the house. However, if you don't like climbing stairs, you might want to arrive early as the balcony seating is up several flights.
When you arrive, you can select which line to get in, though the orchestra line usually fills up first. If you have preferred seating, you go in before any of the regular lines and can sit wherever you like.