Okay... here is where I get the award for WORST MOTHER EVER!.....................
We (my kids and I, ages about 5 and 7 at the time), saw SpongeBob at the local McDonalds. The costume was sort of lame and when we were in the car on the way home my DS (5) asked me...."That wasn't the real SB, was it??" Trying to be the fair and honest parent I said "No.... it was a man in a costume, just like when we see Mickey Mouse." To which my son replied in a very tearful, choked up voice "WHAT?? YOU MEAN MICKEY ISN'T REAL???" followed by stunned silence.
I realized at that moment what I had done. I guess I had figured that by 5 my child had realized that these characters weren't real.... but I was WRONG!! Well.... I quickly recovered (I think) by telling him that the Mickey we saw in Massachusetts at a Lions Club fundraiser wasn't real (but my kids knew that, as we had just returned from WDW at that time and they KNEW that the Mickey we were seeing in MA was FAKE as can be!). "But of course honey, the Mickey at WDW is REALLY Mickey!!"
(Sorry for those of you who don't think I should have lied to my child, but I did what I felt was right at that time. No Flames PLEASE!)
I think all was well after that. This happened a few years ago and we have been to WDW since then and he had total love and enthusiasm for all of the characters, so I think all is well.......P