Storm Bride, I totally see what you mean. You're honestly with yourself is very impressive! I don't like the cocoa cola santa and have trouble with that, too. I would feel like that is a betrayal, or would feel awkward. I like how honest you are with yourself!
Of course I don't tell my kids that hobbits are real factual beings, but there is a suspension of disbelief. If I read the story to a child young enough (many kids under 7?) There wouldn't be that distinction though. There isn't a developed notion of fiction vs. nonfiction, and fictional stories must resonate as true on some level.