We just got back from our first family trip to Disneyland in April. My kids are 8,8, and 10. I saw parents with younger children and at first I thought we had waited too long to go since only my 8 year old daughter still believed in all the characters and wanted photos with them all. Perhaps we did for that reason but we have decided, for many other reasons, it was the perfect time. We saw families with little ones for whom a day at Disneyland was obviously too much. Those kids were too little for many of the rides so the trip was very limiting for them. The kids were often overstimulated or overtired but, I think with one toddler, that may not happen as these were families with toddlers and another preschool aged child and it looked hard to balance both of their different needs. I think, if I could do it all again, I may go when my kids were 5,5 , and 7 at the youngest or just stick to what we did. We didn't need strollers, the kids could handle walking all day for 5 days (with Disneyland as their motivation anyway, not at home!), they really understood it all, will remember it forever and got to go on anything they wanted to go on (Our favorite was Soaring Over California in CA Adventures and I don't think a 2 year old can go on that but not sure?)
As for the hotels, we thought since this was our one big trip, we should really pay the (lots) extra and stay at the Disneyland Hotel, wow! I do not advise this route. I do not believe the hotel was very kid friendly, it seemed very impersonal, and nothing really so wonderful that was worth the extra money. We were in the Dreams Tower at the Disneyland Hotel, a newer one apparently, and it was dark and formal like a business hotel. They did play Disney music in the lobby and had a cool nightlight type thing on the wall but not worth staying there for, in my opinion. The food is limited, unless you want extremely expensive dine in options at all times and there is no microwave in the rooms or anything to help you if you found a way to bring your own snacks and such (we had packed cereal for breakfast, muffins, drink bottles to refill every morning to bring into the park and lots more which was very helpful) otherwise we would be, even more, flat broke)! I have since heard from friends that the Candy Cane Hotel is a much better option with kids. It is reasonably priced, has a fun atmosphere, includes breakfast, has microwaves and fridges in the rooms and probably a lot more that I don't remember or they didn't tell me. You can walk to the park from there or take their regular shuttle. Even from Disneyland Hotel, we had a long walk and there's really no way out of doing tons of walking no matter what.
One last thing to consider is the crowds. There's a website where you can check the usual attendance rate for the time you want to go (sorry I can't provide a link but you can Google it). We went when it was a really "quiet time" and I would not want to do it any other way. There were still lots of people there and sometimes we waited quite a while in lines but for the most part, we had very short wait times and got to do so much more that way. I think if it is really hot and very crowded, that may impact the enjoyment you and your little guy will have but then, lots of people do it so maybe it's just me.
That's just my observations. I'm sure you would make it fun no matter what and I wish you a very happy holiday!