Hi Lee! It is perfectly acceptable to enjoy the dining options at the resorts, even if you are staying off-site. It's also a great way to check out the resorts for potential future stays!
Character Dining is always fun! I would suggest you base your selection on what characters your family wishes to meet. A couple of my favorites are:
Chef Mickey's - breakfast or dinner (Mickey, Minnie, Goofy, Donald & Pluto); '
Ohana - breakfast (Lilo & Stitch and friends). Please note that characters are subject to change.
A couple of fun recommendations without characters include
Whispering Canyon (tons of fun) and 'Ohana (they offer coconut races and hula dancing for the kids) for dinner.
Another option I'd like to mention that is not a dinner but I think you'd still have fun is the Chip 'n Dale Campfire Sing-A-Long over at Fort Wilderness.
I hope this helps get you started. If you need more suggestions, just let me know! I hope your vacation is truly magical!