LT,
I think some things should be made clear from the start to a child. 'Be careful of which adults you trust' would be a good one. They could use critical thinking skills and ask themselves questions like 'Is this person a teacher?' or 'Why is this person I've never met before trying to get me into his car?'
With things like Santa and the tooth fairy, I don't have a problem telling a child about these characters and letting them believe in them. There have been no bad effects to doing this that I have seen in studies or from anyones experiences (unless someone can show me otherwise) and in most cases they stop believing in them before the age of 10. If they don't, and carry on believing in Santa or the tooth fairy into adulthood, we have people and places that can help them- doctors and mental institutes.
If a child is 12 and says they don't believe in Santa, telling them they're wrong, or that you're disappointed in them, or treating them as if they're on Santa's bad list, is a bad attitude to have.
Fantasy in childhood is part of our development, but I don't think it should carry on past that. I'm not talking about using the imagination, I'm talking about really believing in people such as Santa. When fantasy ends, reality takes over. You may agree that reality is good and should be part of our worldview, but if not I can go into that in more detail.
I would be okay telling them my views, but I'd also tell them that they were mine, and that they didn't have to agree. If they became religious and didn't like to hear me bash faith, I wouldn't do it in their presence. That would be forcing them to listen.
On the topic of religion, I feel there is no reason to believe in a god and I see faith as another word for ignorance. My views may not be better, but I think they are, and that's why we get debates on the subject. I'm willing to be proved wrong.
People decide for themselves what to believe in the end, and talking about these things openly can be beneficial. I think it would be harder to accept new information if all we had were our own thoughts. Outside influence comes in and teaches us things we may not have known before.
I put god at the same level as faries, trolls or monsters under the bed. When god belief reaches this level in society as a whole, it may be okay to say to a young child there's an invisible being who made everything. It would be like telling them there's a man at the north pole who brings presents. It's fun to believe for a while, but it shouldn't be for life.
There would be other points to consider, of course. Like the prayer example- telling a child the tooth fairy is real is one thing, but telling the child they can have a personal relationship with the tooth fairy, that it has a special place you go to when you lose all your teeth or that any problems should be told to the tooth fairy before bed, is bad. It goes much deeper than a childhood fantasy then.
Appeals to emotion shouldn't be part of a debate, but in this case it is a hard one to avoid. People shouldn't be made to suffer, and if indoctrination can make a child suffer in some way (even in subtle ways) it should be open to discussion. If it was pointed out that people starving in Africa was a problem, it would not be dismissed as an appeal to emotion. It may affect us emotionally, but it is still a problem.