Let's see if I can answer some of your questions ...
First of all,
www.biddingfortravel.com (BFT) is a great resource for learning how to bid on Priceline. Make sure you print out and read the Hotels FAQ and read the Orlando Board before bidding! You'll want to also check out the Florida hotel reviews.
(1) Priceline uses it's own ratings for hotels. BFT has a list of hotels that come up in the Orlando area
BFT's Orlando Priceline Hotel List. Some hotels have not come up in months (like the Swan and Dolphin) and others not on the list may come up at any time. But ... it's a very good starting point. If you bid at the 3* level you would probably come away with the Renaissance Worldgate, the Hyatt, the Doubletree Suites on 192 or the Sheraton Safari. I just booked my mother into the Renaissance for $35 per night

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(2) If you get a complete dump you can complain to Priceline. I stayed at an awful hotel last December in South Carolina. It was supposed to be a 3* but was not even a 1*, IMO. PL gave me a special link that I could use to get $10 off another bid up to $50 total. I am a frequent PL user and saved more money with the "sorry" bonus link than I would have just having my money refunded for the dive.
(3) Most hotels in Orlando will accommodate families of 4 with 2 beds on a PL reservation. I have heard of the Hilton being stinky once about putting someone in a king room, but that was the only time I read a complaint about not getting 2 beds. Hotels outside of family tourist areas may not be as flexible. Once you have your reservation wait a day and call and request the bedding that you need.
(4) Rooms are usually automatically "non smoking"
requested. Like other requests at all hotels (including Disney, BTW) you may end up with a smoking optional room. Again, make your smoking request after you have your reservation.
(5) To insure that you will all be in the same hotel you will need to make the reservations all at once. I believe that you can make a reservation for 3 rooms. It gets trickier if one family wants to stay a few extra days. In that case I would coordinate bidding so one family bids and wins and the other families bid the same winning amount right away. You do run the risk of being in different hotels, though.
(6) Remember, a PL reservation is not cancelable! Make sure you know your dates and are 100% sure you are going.