I came across this thread, and wanted to bump it by saying that watching the fireworks from IASW were one of the highlights of our recent trip. Everyone sat down to watch them (as the CMs said, it happens above us, so no need to try to be taller than others), which the CMs said you couldn't do watching at the castle. If you turn around, you can see some of the castle stuff, like the pirate moments, and even Tinkerbell (though she's a bit of a blob, rather than a flying fairy, from there).
If you get there early and make friends with the CMs, they'll tell you where to stand so you are positioned at the "gate" they make to let people onto IASW. We did this, and were the very first on IASW after the fire marshall cleared the area.
I'm not entirely sure I will ever feel the need to try out the castle for fireworks, b/c this was just SO amazing in and of itself.