When I dreamed of and began planning the holiday I've just returned from, I never envisioned anything else other than spending Christmas Day at Magic Kingdom. And it was amazing, the best Christmas I've ever had. Crowded? Absolutely. Worth it? You bet.
We arrived around 12 (spent the morning in the resort pool and hot tub, opened presents, had pancakes etc), did our three FPs, had dinner at Liberty Tree Tavern (perfect if you're looking to go traditional), watched VoicePlay and then left (to go look at WL's decorations and then back to the room to play games). I appreciate other people's mileage is going to vary on this, and if you're looking to avoid the busiest of crowds, MK is probably the number one place to rule out - but if you don't care and are willing to pack your patience, soak up the atmosphere and the feeling of being there on Christmas Day, you will love it.
It works a lot better if you can factor in another full MK day either before/after to actually "do" the park, so you're not expecting to cover all the attractions on Christmas Day itself. We did the 21st (which was a Christmas party night too) and then frequently made evening visits there across the rest of the holiday, it helped temper our expectations for the big day.
I'm not sure what Universal was like on the 25th, but I do know Islands was HEAVING on the 27th. Volcano Bay and Aquatica were empty on the 26th and 24th respectively however.
Have fun planning - I'm already jealous!