There are many wonderful character experiences at WDW and you'll be sure to come home with great photos of your children with their favorites.
A fabulous place to get photos of your children with characters is, as you suggested, at a meal with characters. Click
here to get a list of character dining experiences on the WDW website. To make reservations for character meals, or any restaurant at Disney World, you need to call Disney Dining at 407-WDW-DINE. You can make your reservations up to 180 days in advance of your trip and I would suggest that you make them as early as possible. Character dining is very popular and slots fill up quickly.
The characters do appear in parades and that's a great place to see them, but you won't be able to get a photo of your children with a character during a parade. However, there are many character greeting spots scattered throughout the parks. Take a look at the free maps and Times Guides you'll see at the park entrances. These will show you exactly where the character meeting zones are. If there's a specific character you're looking for that you can't find, go to the guest relations office of any of the theme parks. Ask them to call the "character hotline" for you. They will be able to tell you exactly where your favorites will be appearing during your stay.
Have a great trip.