Oh my goodness, I feel your pain. I love fairy tales, but the disney princess thing irks me. Of course that means my darling child is pathologically princess obsessed.
For decorations you could make banners or pennants with dragons, crowns, heraldry motifs or tudor roses. You could have a maypole... maybe a 'magic mirror'.
Perhaps you could make some life size tissue paper ball gowns and display them. Tiny dresses made from scrap fabric or paper and strung into ribbon make for cute decorations (have you seen Ella Enchanted? Right at the beginning, baby Ella has tiny tutus string on ribbon in the nursery... very cute.)
A ruffled table skirt would be pretty, draped with pink tulle of course. Put some pretty cushions on the seats... maybe the birthday girl herself could have a throne instead of a normal chair?
Lots of feminine touches, like flowers and ribbons, would be nice, and twinkle lights. You could have some 'glass slippers' on a satin cushion as a centrepiece.
Instead of party hats, try crowns, tiaras or even cardboard knight's helmets for the boys (google it, there are lots of different tutorials online). Little treasure chests filled with goodies and party necklaces and princess colouring pages would make for nice giftbags.
Hope this isn't too nauseating for you! I'd love to see how it all turns out