For bibliotherapy, you might like "And to Think that I Saw it on Mulberry Street" by Dr. Seuss. The story is about a boy who loves to tell outlandish tales about what he sees on his walk home from school. Bottom line: he engages in fantastic imagination but tells the truth.
I always add my own line at the end of the book, "But upon further reflection, Marco decided to tell his dad about all the wonderful things he had imagined, too, knowing that it was just pretend." The dad just seems too stern and insensitive otherwise, like be couldn't care less about things that interest his son.
