Hi Michelle!
My favorite character breakfast at Walt Disney World is at the
Crystal Palace in the Magic Kingdom. In fact, this breakfast with Pooh & friends is the first character breakfast my kids ever attended! Its become a family tradition that we still continue even though my kids are now teens!
Usually at this dining venue, Pooh or one of his friends will be available for guests to interact with in the center of the restaurant while the other characters tour the restaurant and stop to visit at each table. This does help small children who may be afraid of the characters gradually warm up to them, since one of the characters can be approached (rather than having them just "appear" at the table).
If you're looking for a breakfast outside of a park (so that no park admission is required), a highly touted meal can be had at
Chef Mickey's at the Contemporary Resort. Mickey and his friends dress the part as chefs and visit each table. The buffet is spectacular too.
Hope these options help. And, PS - if you do decide on the Crystal Palace be sure to try the Puffed French Toast!