There are a lot of people that have very strong feelings about their children not interacting with characters including WDW ones, store Santa etc. While it is unfair to express their feelings in front of other kids, they do have the right to avoid and shield their children from these situations. One blog I follow was speaking of the Mall Santa they had visited for years with their large family. It was finally discovered that the Santa was not a very nice man and was arrested for Pornography of children. It made them, as it would anyone, sick to their stomach to think of their children on his lap. Some parents do not want characters touching and interacting with their kids. This is ok.
Neither of my boys ever believed the characters, Tooth Fairy or Bunny was real, though Santa did have a very short time of glory. Everything but Santa they just never had ANY believe in and the Santa story we let them believe until they asked straight out. Little one was like 5, older was was older but admitted he had it figured out by five.
Thing is they both LOVED all the characters at WDW. I HATE character lines so we do the meals, plus hunt down the one or two other characters that they really want to see (like Buzz) and try to time it so we see him with little wait. They know not to tell other kids the truth (but the little one has questioned how in the world they have not figured that out yet

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BTW-Santa, Bunny and T Fairy do come to our house.....they were and are just in on the truth!