Jorgen

Assuming you get the accommodation issue sorted, the fireworks are definitely spectacular and it's a great place to ring in the new year. It'll definitely be crowded at all the good vantage points, but only from 9pm-1am.

You're not going to be dodging crowds all Jan 1-2, in fact Jan 1 will be very quiet as everyone will be at home nursing a hangover. It's not crowded because massive numbers of people come to Sydney, it's crowded because all five million people in the Sydney metropolitan area wants to pack into the harbour area -- then they all go home. So yeah, seeing the main sights will be no problem (though some things may be closed on Jan 1 since it's a public holiday, check on that).

I could recommend some vantage points, but ultimately the best vantage point is the one you can walk back to your hotel from. Public transport will be a mess and taxis are really hard to find in the post-fireworks period.

edit: I just read the bit about Summer Hill -- in that case you probably won't want to walk back and should just brave the train. I would perhaps recommend McMahon's Point as a good yet accessible viewing location accessible on foot from the train station, and crossing the bridge should allow you to avoid some of the worse excesses of the crowd in the CBD proper.