Mt Fuji

hi
we plan to be in Fuji mt. on 14.8, obon week. I know it's crowded but these are the dates we have. We dont plan to go up to the top but walk a bit and expirience the area (we are with 2 kids).
First- is it really crowded so we should aviod it?
second- where should we sleep? one of the huts? if so, how do we do booking? if not, should it be fuji yoshida or somewhere near? how far is it?
thanks

First- is it really crowded so we should aviod it?

I have never been there during Obon, but I think it will be quite crowded. The buses to the 5th Stations will probably be quite crowded, but I think they should have enough capacity provided. It probably also depends on when you take the bus. I think the "peak hours" are in the morning (when people start to reach a hut by evening) and evenings (when people start to hike through the night), while the afternoons are somewhat less crowded.

second- where should we sleep? one of the huts?

No, I recommend to avoid the mountain huts. Too crowded. It depends on what you want to do around the mountain. Instead of hiking to the top, you could hike to the Hoeizan crater (1-3 hours round trip from Fujinomiya 5th Station) or Kofuji peak (1 hour round trip from Subashiri 5th Station):

About Hoeizan:
http://www.japan-guide.com/e/e6930.html

About Kofuji:
http://www.japan-guide.com/e/e6928.html

Or just spend time at the mounatin's base and walk somewhere around there:
http://www.japan-guide.com/e/e6900.html

thanks for the recomendation. I decided not to go to the peak, i think it's not realistic with the kids+ the crowds at that time. The alternative of some walking trails is great.
we are thinking to keep our base at Kawaguchi-ko and go for 1 day trip to Hakone (instead of taking all the bags for sleeping there.
My question- how much time does it take to reach Hakone? how much does it cost?
thanks

Transportation between Kawaguchiko and Hakone is explained on the following page:
http://www.japan-guide.com/e/e5206.html?aFROM=5200_6900