It is much more crowded during the Christmas/New Years week than in February. It is so much more busy that a few properties even have higher rates during that time period.
But yes, there is no need to deal with the "over the river and through the woods" drama that tends to play out at this time of year...
As for a couple of the original poster's questions:
1) Are most the restaurants open on Xmas day or do many close for the holiday?
Virtually every place will be open during the time period - a very few of the smaller places may close for Boxing Day (the 26th) but still nothing to be concerned about...
2) How crowded do the restaurants get? Its already slow service as expected....not sure how much slower it gets when the restaurants are busy.
There many be some restaurants that you may have to wait in line, but you will notice that the service will be faster to handle the increased number of people dining.
3) Is it more difficult to rent a scooter due to limited availability because of the number of people? I normally pay $20 per day off season for a week. What would I expect to pay (I know I gotta negotiate) during the holiday? Do I need to try to reserve in advance?
Supply and demand will dictate that you will probably have to pay a bit more for the scooter - but as you noted, it will still be negotiable. Since most scooter places rent on a first come, first serve basis - I would not suggest to try to reserve in advance, unless you have a working relationship with that particular rental place.
This time of year is an absolutely wonderful time to be in Negril! The holiday cheer has gotten a hold of everyone! But remember, with the increase in people there is an increase in traffic - and the "cheer" aspect needs to be considered as well. Be very careful on the scooters, and wear your helmets!
See you around Christmas! Cheers!