We pay to upgrade with free dining, too. Last trip (in December) we stayed at AKL so we only had to pay from the regular plan so it was not too much more...this trip we we're staying at POP so we had to upgrade from quick service. It still saved me a TON. When I first booked POP I could only get the Sun & Fun discount, which was a whopping $10/off a night I believe, and I paid for park hoppers. Then 1 day last week I checked for Free Dining and poof it was there! Even with my upgrade to Deluxe I saved hundreds.
When we vacation anywhere we always eat out for breakfast and dinner, so in December we did almost all pre-park opening breakfasts and 2-credit dinners. It was awesome getting in early and having the head start on other guests for rides like 7DMT, Soarin, & Frozen. Only 1 day did we have 3 meals and it was because we did the Tony's Parade Package to get front row for the Festival of Fantasy Parade. We're the type of people who enjoy steak/scallops/lobster etc for dinner on vacation, plus we like desserts and apps, so we have no problem always picking expensive items to make the dining plan worth it. We did California Grill for my husband's birthday brunch and when the check came I almost choked - after tip it was $450...if we had paid out of pocket! I could not fathom spending what we spent at places like Cali Grill, Narcoosee's, the Boathouse, & Jiko if we paid out of pocket. Sure, some meals we skipped dessert or my kids just ate mac n cheese, but we don't care. The main thing to remember is tipping will really add on - you're getting apps, entrees, and desserts everywhere (though you can decline), so that adds up. Some places let my kids order off adult menus because the server knows they'll get a better tip that way. Some places let us have 2 drinks. We spent about $800 in tips.
Besides doing Signature places, one way we stretch our plan is our arrival and departure times. We fly in at 9:30am and fly out at 8:30pm, so both our arrival and departure days are 2 meals that we use the plan for. I say go for it!!!