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Some analyses of the appeal of fairy tales for children, especially the most gruesome, theorize that, by experiencing their own worst fears (lost in the woods, death of parents, etc) in a safe way-- ie, fictionally, through the characters' experience-- kids get a chance to process their fears on a subconscious level and be reassured that there is always Hope for a happily-ever-after.

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Here's some links:

KatieBabs
Dear Author (Janine)
Lurv A La Mode (Kmont)
Errant Dreams Reviews