You need atleast a month to process Canadian visa if you do not have green card or american citizenship.

If you have any of the above, i suggest you to cross the border. Niagara falls is much much better from Candian side. Do not stay in the niagara city in canada (i think that's what its called), those hotels at the border are pretty expensive. Try driving abt 40-50 mins north toward st. catherine. It's a small town right between toronto and niagara city. Hotels are much less, not necessarily cheap, around that area. If you plan accordingly Toronto is just another 45 mins drive from there. It's really nice drive along the Lake Erie. I loved it. Toronto is nice city, lot of good restaurants along the lake's coast. Although, you will be surprised with number of people from indian sub continent in Toronto and places in Canada.

Back to Niagara falls, i haven't been there during july 4th but as bhshre mentioned the influx of tourist is pretty insane. I read somewhere, it one of the highest volume destination during july 4th vacation. That said, i would have recommended the pacakaged tours organized by city of toronto, which are full even during regular three day weekend, but it's your call. Depends how you like to spend your vacation standing on line with your sticky, sweaty body (eggrrhh gross, :p)

take care, and drive safe