Yes, you can. Fireworks are front and center to the Castle. Of course, the higher the better. You can still see it from the first floor, but the bungalows will block the view of the Castle.
Whether or not to splurge for LV is totally a personal decision and how your family vacations. We've always done lake view, but it's because DVC allows us to vacation differently. We spend equal time in the resorts as we do in the parks. So, on a resort night, it's nice to open up your curtains to see the MK fireworks from inside your room. Heck, it's
always nice to open the curtains to see the Castle! If you have enough points, I would say do it once and see how it goes. Some families prefer a "better" (subject to interpretation) resort experience, but some prefer to bank points for a future longer stay. We travel from NY and stay in PVB once a year, so we can bank to rent but we prefer to just use it ourselves.
Just remember, the view is nice, but the ferry horns can be an annoyance to some. If you have light sleepers, LV may not be the best for you. Also, since you have younger kids, 1st floor may not be a deal breaker. My friend actually prefers the 1st floor with 2 young kids. He can open up the balcony doors and the kids can go out to see the ducks, rabbits, and squirrels. He claims that it's like having your own backyard with fireworks in the distance.
Congrats and Welcome Home! I bought PVB sight unseen without ever staying there as well. It was the only thing I bought that my wife was happy about afterwards. Can't say that about last night's dinner, though!