Fine line between fantasy and reality

I am completely fascinated with the way that children, as they grow and learn, absorb information from everyone and everything around them. Input floods in and they make their own individual often sensational connections and conclusions, building up their own picture of how this world works. I have been teaching myself not to just tell them the answers to stuff, but ask them my favourite question - How do you think it works? (Thanks to Play Centre, where I learned this cool albeit simple idea). However sometimes it gets...tricky.

Little brother decided he was a bit scared of eating blackberries, after an unfortunate tummy bug hit him right after eating a lot of them. (I'll spare you the details of what the car looked like). I tried to explain that it wasn't the berries that had made him sick, it was a tummy bug, and his tummy got rid of the bug by getting rid of everything in it, and that's why he was sick. After a few moments thought, he said 'Yeah, I think it was a slug. It went down here (gesturing nose) and into my tummy and made me sick.'
'Well, No - 'I tried to explain-' I don't think it was a slug, but a tiny bug so small you can't see it, you need a microscope to see it. Those sorts of tiny bugs can make you sick.'
But he wasn't convinced. A few minutes later he said -
'Mum, I think the slug went into my brain and made a nest'.
Oh, dear.

Big Brother we have noticed oftens blurs the line between fantasy and reality. He composed a beautiful and moving prayer the other morning at school - all about his Dad who had been caught in the Tsunami in Japan, and was in hospital in Japan. I expect in a prayer session where's there's a little bit of one-up-man-ship involved, it was really impressive.
'Is he ok? his teacher asked.
'NO, he's in hospital, in Japan!' he re-iterated.
His teacher gave him the benefit of the doubt and the class all prayed. Hopefully those prayers were helpful for someone actually in that tragic situation. And she then checked with me.
That night we had a chat about the importance of telling the actual truth (particularly when dealing with prayers and the all-knowing entity), and the difference between a story and a fact.
Oh dear.