Goodness...if my kids ever thought gigantic furry walking talking animals were real, I would have never gotten them out of the house!! How terrifying!! LOL
We have always told our kids that the characters were people dressed up in costumes. Not sure why that would take away any magic??!! Other than not having to stand in line for meet and greets or pay expensive buffet prices...which all seems to be a plus in my book.
Besides, my kids figured out pretty early that cartoons are fake, so why would they have ever thought that the cartoon Mickey would suddenly come alive in Disney World?
I certainly wouldn't lie to them to prolong their beliefs, but that is just my opinion. My kids are 13, 9, and 8. FWIW, the oldest asked about Santa at about age 7, the middle asked at about age 7, and the youngest told me at age 7 that he knows I am the tooth fairy and that Santa probably isn't real either. I asked him if that bothered him and he said no, he knows he will still get presents anyway

It definitely didn't hurt any of them, and I think that they honestly felt a little relieved that they could cut the middle-man (Santa) out and just give us their lists directly LOL We are not heartless, BTW...when each kid stopped believing, we did have a very serious discussion on the meaning of Christmas, the history behind the "real" St. Nicholas, what he did for children, and how it is up to each one of us to carry the kindness and goodness on by sharing gifts and acts of kindness with each other.
As for handling it with other kids, we told each of our kids when they stopped believing that there are kids their age, or younger, or even older, that still believe. If they came across someone who did, or was in a conversation with someone who they think might still believe, they were to not say a word about what they know and pretend for that person. We told them that they had to have the respect for each person because there were plenty of people who knew the truth when *they* still believed and never told them, so they have to do it for kids now. My kids are pretty empathetic, so they never wanted to ruin anyone else's day. It all worked out.