There are also great outdoor markets, like the Bryant Park (off 5th Ave, near AG store) and Union Square (downtown - take 4-5-6 or N-R lines downtown to Union Square/14th Street station & go upstairs) holiday markets, which might be fun to look at. I'm hoping to take my own DD this year ... if I can block out a weekend that isn't too cold and convince my brother & his girlfriend to meet up with us.
Depending on what you like to eat, there are quite a lot of options. I definitely recommend the "Time Out NY" kids tips!!
My DD adores Times Square at night, but I admit it does get crowded!! I don't mind much because I usually wear DD whenever we go to NYC, which means I can get to/from places a lot more quickly than if I'd had our stroller ... and she gets to see things at my eye-level, which is great.
Per Rockefeller Center.com, the 2013 tree will be lit on December 4th.
If you're interested in the store windows, here's a walking map: http://gonyc.about.com/od/christmass...maswindows.htm
Do note that it's awesome, but does get VERY crowded and can be cold. I would definitely wear your 1y/o on your back if you can; tie the mei tei's belt above your belly if that's comfortable. If not, you can try below, but I think your best bet will be above.
Supplemental links:
Info for Union Square Holiday Market (opens 11/21): http://gonyc.about.com/od/christmass...maswindows.htm
NYPL Exhibitions calendar, including "The ABC of It: Why Children's Books Matter": http://www.nypl.org/locations/tid/36/exhibitions
Bryant Park Winter Village (also has ice skating if Central Park & Rockefeller Center are too crowded): http://www.bryantpark.org