"Fairy tales, then are not responsible for producing in children fear...The baby has known the dragon intimately ever since he had an imagination. What the fairy tales provides for him is a St. George to kill the dragon. Exactly what the fairy tale does is this: it accustoms him for a series of clear pictures to the idea that these limitless terror had a limit, that these shapeless enemies have enemies in the knights of God. That there is something in the universe more mystical than darkness, and stronger than strong fear."
On a related note, check out this archived podcast discussion on censoring Harry Potter, from Julie and Scott at A Good Story is Hard to Find.