Used to live near DC, and the 4th there is awesome.
If you're not staying somewhere in the District, you can take the Metro in. I'd go in earlier in the day because there is usually a ton of activity on the Mall along with some sort of concert near the Capital.
It will be plenty crowded but as beef mentioned, the city is well equipped to handle the crowds.
The best places to watch the fireworks are near the Capital, so you can hear the orchestra and the Army howitzers firing OR watch close to the Washington Monument.
Both places are good views of the show. One other place that should be cool to watch is on a boat on the Potomac. I've never been able to do that but looks cool.
If you take the Metro in, the crowds coming out will be HORRIBLE. My recommendation is to not pick up the train at the Smithsonian station. That one is usually one of the most crowded.
IIRC, the yellow line at the Archives/Navy Yard is a decent one to grab the second the show is over.