Hi Eileen,
Probably not as packed as last year. Last year, were a holy year and this meant exceptionally large crowds. Last year, there was a laser show and fireworks on the cathedral walls at night and this drew a lot of people. Actually it was physically impossible to get into plaza de Obradoiro just before the fireworks. Earlier in the day, no problems, a lot of people but not "crazy-a-lot".
This year, I am expecting (and I am only guessing) that it will be much less people. I would not be concerned about bringing kids due to the crowds. But just remember that the fireworks are late at night, and if you do not have a place to stay in Santiago, it might be a long day for small children.
If the weather is nice, you can see the fireworks from the alameda park. Plenty of space and more fun for kids than standing and waiting for it to begin on plaza de Obradoiro. If it rains, everyone moves inside to the small bars/cafés, so it will be more crowded.
Regarding the program. I don't think anything has been announced yet, but fireworks at night is a given, this happens every year. Usually there is also a "Tivoli" in the park. Last year there was also some sort of entertainment for kids in the park (remember I read about it in the paper, but don't remember more details of what it was), but I am not sure if this was due to the holy year, or if this is also planned for this year.
Would you recommend visiting santiago on this day with children.
I would definitely take the trip. During the day the crowds are not that bad in town. At night, if you want to get away from the crowds go to the park and see it from there.
Welcome to Santiago,
Ivar