Yeah, I don't see a happy fantasy life and a grounding in reality as in conflict with each other. The whole point of fantasy life is that it's fantasy. If you really believe it, it's not fantasy, is it? It's your reality.
We've always been quick to help DD sort out what's real and what isn't, with the only exceptions being Santa and the Tooth Fairy (and the latter officially ended last night), and honestly, I think it removes a TON of anxiety on her part. Yet despite having known for years that there's no such thing as magic, she still loves Harry Potter (and made a darling Hermione Granger on Halloween).
Last night her imagination was on a roll, as she proposed a "realer" (a machine that takes in fake things and makes them real) and having a "future brain" (sees the future) within about 10 minutes of each other.
So yeah, the fantasy realm is alive and well in her brain. DD is also happy to entertain the ideas of werewolves, vampires, and zombies, but there's no reason to even suspect there's any fear involved, because she knows full well they're all imaginary.
