I think you can run post war trains that much, it won't hurt the engine. As long as you aren't putting a big load on the engine (like a long train with heavy cars) it shouldn't overheat. The motor in those things is pretty rugged, as long as it is properly lubed you shouldn't have trouble with it running that long IME. One thing I would recommend, take the engine apart before using it, and check the grease it in especially on the worm shaft from the engine, that grease if an engine hasn't been used in a long time tends to become almost solid. Use a good grease (red and tacky, or whatever is generally recommended by people), and you should be fine for the holiday season. I would recommend every couple of days at least to oil the wheel bearings on the engine and the cars you are using, those will tend to need to be redone with that kind of steady use.
The old Lionel smoke units didn't have a switch, they ran on pellets, and wouldn't burn out if you didn't put them in there, and in fact they didn't have any on/off switch. If you are concerned about that, it is easy enough to open the engine up and disconnect the wire going to the smoke unit if you worry about that. Usually if people switch to liquid units, they find a way to have a cutoff switch on the engine of some sort, because they do have problems if they are on and there is no fluid. In running a display like you want to, I would not have smoke running.
Given what you are talking about running, an engine and a couple of cars, you should be fine running AC. If you do run DC if the tender has a whistling tender , you will need to disable it, running DC with a whistling tender will cause it to sound continuously (I am talking postwar whistling tenders, though if modern electronic tenders respond to the transformer whistle control, they will blow too I believe).