The 7:40 reservation time is a good choice. At a signature restaurant like CG or Narcoossees a 3 course meal takes us about 2 hours so we make our reservation 60 - 90 minutes before Wishes. Just let your server know you want to go outside to see Wishes and they will pace your meal accordingly. Often we are between the entree and dessert course so we place our dessert order then go outside. At both restaurants the lights are dimmed and the music piped into both the restaurant and the deck. At Narcoossee's the Electrical Water Pageant can also be viewed closeup, but the music is not piped in so you will need to be on the deck to fully enjoy it.
Did you choose CG or Narcoossee's? Both have excellent food and service so we try to go to both on our trips to DW. Narcoossee's has my absolute favorite DW dessert - the Almond Crusted Cheesecake.