I don't know what to make from this thread. I don't really think that one can argue that these things are just fantasy and therefore ok. Fantasy is to an extent a way of coping with what we want but can't have, a way of constructing, or participating in a world that is more like what we want than what God has created. In that sense I think that fantasy is not a good thing when indulged in. And yet, when Christ taught us, He taught in parables. Sometimes it is easier to make a point, to teach a lesson, or to express a truth in a fictional world where one can craft each and every character and situation in order to make their point. I think fantasy can be a good thing insofar as it points to God, rather than away from Him. If there are Christian principles being presented which are taken from the fantasy world into the real world, I think it is good. If however, one takes bad things from fantasy into the world, or withdraws from the world into fantasy, it is harmful.
As a teenager, I played a lot of different role playing games. I only played D&D once, as I didn't like that I had to know so much about mythological characters. I mostly played Superhero, espionage, and Star Wars RPGs (so yes I was a nerd). But all of them involved escaping into a world of fantasy for a while, and all of them involved violence to a certain extent. However, I always distinguished between what occurred in the game and real life. I was able to walk away from is having had fun for a few hours, and nothing more. My characters used violence only when attacked or to serve the greater good, and most times, I tried to think of ways to avoid violence whenever possible. I would rate my experience with RPGs somewhere between harmless and beneficial. However, I have seen other people get drawn into these fantasy worlds. I have seen people become obsessed with the games, studying their monster manuals, and learning all that they can from them about mythological beasts. I can't think of a single one of them that is a Christian, although that is probably a correlation rather than causality.
As for Harry Potter, I read the first book, mostly because I wanted to know what the fuss was all about. I didn't find it offensive, neither did I find it particularly interesting (sorry to the Harry Potter fans, it's just not my thing). I can't imagine that it serves as a gateway to witchcraft for children. I know as a kid, I watched Star Wars compulsively, and I have from time to time tried using the force to reach the remote control or get me a drink from the refrigerator, but only ever as a joke. I think that the argument against Harry Potter being presented here lies on the presumption that not only are the spells actual spells as the quote Repentant gave says, but that they specifically call upon demonic powers. I don't know that this presumption is warranted. In 1 Corinthians, St. Paul says that the people could eat foods that had been offered to pagan gods. The reason that they could do this is that there is only one God, and that all those gods are not real. It seems to me that the spells in Harry Potter might be very real spells, but calling upon absolutely nothing. However, St. Paul then goes on to say that they ought not to eat the food so as not to scandalize those who are weak in the faith. I don't think that we ought to give children something that could potentially be dangerous to them. They are (generally speaking) not yet strong in their faith, and could be swayed. I am glad that the Harry Potter books have done so much to encourage children to read. I hope that it does them no spiritual harm, but I am not the one to decide for them and their parents what they should and should not read.
Ultimately, I think that parents should spend more time teaching their children to love God, to love his Holy Church, and to instill in them a burning desire to please God. If a child is given this wonderful gift, they will know for themselves whether something is drawing them toward God or away from God, and they will want to shun those things that are not beneficial to their souls.