We (me, DH, cousins - then 11 and 13) were in WDW for July 4, 2001.
I had (pretty far in advance, I think) made priority seatings at Tony's. We started the day at AK, went back to the hotel for a few hours in the afternoon, then headed to the MK around 4 or 5.
I'll admit that I was really, really worried about the gates closing, but it wasn't a problem (though I do they they did hit max capacity and closed the gates by about 7). We had a nice dinner, watched the (absolutely amazing) fireworks from Toontown, and then enjoyed the late closing time. The park didn't close until 1 or 2 a.m. and for the last hour or two the kids had an amazing time walking onto anything they wanted over and over again . . . since most people left after the fireworks.
I agree - it was very special to be in the MK for July 4.