V.P.
I love the idea of the headphones.
We've also watched fireworks from "The Mound" a few times. It's not very close to any one display, but you can see displays over Lake Grapevine, Lewisville, Flower Mound, even The Colony and Irving. It's very quiet and usually there are only a few families up there. Being outside of the high-traffic area also allows for a quick exit so you can get home... even with a nap, that will be a late night for a toddler.
Here's a great list of area fireworks, parades, and activities in our area:
http://familyeguide.com/July-4th-Activities-DFW.html
You might try the inside parade at Vista Ridge Mall. I've never been, but it would solve the issue of rain or heat.
Flower Mound's parade is a lot of fun, too.. the kids decorate their bikes, wagons, strollers, etc. and everyone participates.
Flower Mound is having a "splashtacular" at the CAC on Sunday, and there's a patriotic concert at Trietsch Memorial on Sunday as well.
Note that some activities are on the 3rd and some are on the 4th.
Good luck!
www.familyeguide.com Free online guide to affordable family activities in Flower Mound, Lewisville, and the surrounding cities.