Hello, Steve!
Both of your choices for nighttime entertainment sound really fantastic for you and your little ones!
If they like Capt. Hook and Peter Pan, they would love the
Pirates and Pals Fireworks Voyage, which encourages Guests to bring their "young seafarer by the hand and head to the docks, where Captain Hook and the bumbling Mr. Smee are waiting." When Disney describes anything like this (i.e. "young seafarer), you can trust that it won't be intense or scary. Many Moms Panelists I've spoken with about this great experience concur; their families enjoy doing this as often as they can, regardless of the age of those in their party!
Regarding Fantasmic, at Disney's Hollywood Studios, this firework and water show may or may not be scary for your two-year-old. While it really has become so many families' favorite, it
is a bit intense for the
more sensitive little ones at certain moments; "the Evil Queen from Snow White and the Seven Dwarfs gathers such classic villains as Ursula, Cruella de Vil, Scar, Frolio, Jafar and a larger-than-life Maleficent" in order to "turn Mickey's dreams into a nightmare." We talked our way through the dark parts when my little guy was two, and I could see that he was really getting scared, but we made it through those parts (phew!) just fine. I'd suggest showing a part of Mickey as the Sorcerer's Apprentice to your little one to see if it's too intense for her, or check to see how the darker moments of Disney classics affect her before deciding. If she just doesn't like them, head to the Pirate and Pals Fireworks Voyage. If she doesn't seem to mind the darker parts, then Fantasmic may be the perfect choice instead!
Please come back with additional questions as you think of them! I'd really love to help make this the most magical vacation it can be!