The last time we went we arrived at 8am and sat a little further down the route. I'd say maybe a few blocks away from the judges stand, about an hour or so into the route. We had no problems finding a good spot on the sidewalk to watch the parade. We went with a pretty large group too....hubby and myself, our then 1 year old son, my parents, and my sister.
I would also recommend bringing your own travel potty for the kids since the portapotties can be gross and not all the restaurants will let you use the bathroom unless you buy something from them. Plus with your own potty right there, you don't have to leave your spot.
Here is the one we have that both my kids use when we are on the go and there isn't a clean bathroom around.
This one even fits underneath our jog stroller, is easy to carry, and everything you need for it (wipes, bags, etc.) fit nicely into the compartments. We've used ours at the beach, park, on long road trips (San Diego to S. Dakota over 3 days). And yes, my kids have peed right out in public. For the more modest child (like my friends 7 year old), we just hold up a towel around her while she goes. My kids don't care and will just go when they need to. I just usually stand or kneel right in front of them to keep all the "weirdos" eyes away from my kids private parts.
Have fun at the parade! And if you get a chance, go and see the floats up close after the parade! We took my son when he was a year old the day after the parade...it was awesome!