I haven't been to this festival but I was in Venice for the Regatta Storica, which happened the same time as the Venice Film Festival in September of 2017. It was crowded but not overly so, when compared to my prior visit in July of 2016. I would advise staying in Venice and if you haven't booked your hotel, do it now, like today because they will sell out or be expensive. Even with the Regatta and Film Festival after about 6pm or so the town will empty. It is the best time to wonder and get pictures. Things won't be open to tour but the city really comes alive. I would also recommend getting up early and enjoying the city in the early morning sun.