I have often seen Peter Pan and Captain Hook hanging out near the Pirates of the Caribbean ride in the Magic Kingdom. But the best way to make sure you see these, or any characters, is to stop by the guest relations office at any of the theme parks and ask them to call the "character hotline" for you. They will be able to tell you exactly where and when any specific character will be appearing at the time of your stay.
I do have another suggestion for you as well. Twice, I've taken the
Family Magic Tour at the Magic Kingdom. This two and a half hour tour takes the form of a scavenger hunt. I'd say it's perfect for kids from ages 4-8. You look for clues, complete silly tasks and learn some cute Disney trivia. At the end of the hunt there is always some sort of surprise. Both times I took the tour, the surprise was a semi-private character greeting with Peter Pan (one of the times Wendy was there too). Peter and Wendy spent about 20 solid minutes interacting with the kids on the tour (both times there were fewer than eight kids). The characters really talked with the kids, taught them some jokes, and even played "Duck, Duck, Goose" with them. We also got to have priority seating at Mickey's Philharmagic and Wendy held my daughter's hand during the entire show. She almost cried she was so happy. Really, this was just about the best money we ever spent at Disney World.
If you are interested in the tour, you should call 407-WDW-TOUR and confirm that Peter Pan still does the character greeting here, because the tour does change a little from time to time.
I hope you and your little adventurers have a great trip!