Is Big Bird real or pretend?

So this is the question Eliza posed as we were eating dinner the other night. I just looked at Stephen and shrugged my shoulders, implying "You take this one." Here is how the conversation went:

Stephen: "Ehrr, Big Bird is a real person dressed up in a costume." (whew, good answer).
Eliza: (sits quietly for a moment, pondering this). "Well, what about Elmo? Is he a person in a costume?"
Stephen: "Well, um, Elmo is a puppet."
Eliza:"Well, what about Cookie Monster, Zoe, Rosita, Snuffalupagus, and Abby Cadabby?"
Stephen: "Puppet, puppet, puppet, costume, puppet."

Eliza then just sat there for the rest of dinner, contemplating all of this new information. I mean, really, is Big Bird real or pretend? Obviously I know it's not a REAL big bird, but he walks and talks and you can touch and feel him. Will this change her entire perception of Sesame Street, her favorite show???

I thought this was the end of this particular stream of her consciousness, until this happened this morning as I was fixing her hair:

Eliza: "Mommy, is Handy Manny real or pretend?" (it's a cartoon, for those of you without preschoolers)
Me: "Well, all cartoons are pretend." I should have stopped here, but I was feeling rather smug, so I went on to say "Just like characters in most of your story books are pretend."

Even as the words came out of my mouth, I regretted them. I knew what was coming next.

Eliza:"But mommy, I have books about Cinderella and Sleeping Beauty. Does that mean they are just pretend, too?"

And so there, in one slip of the tongue, I felt like I had taken all the magic out of the most magical place on earth. And we haven't even taken her there yet. Does this mean that when we do spend thousands of dollars to go to Disneyworld, she'll just look at all the characters like they are pathetic fakers in costumes instead of the beautiful princesses she USED to think they were?? Have I taken away years of childhood fantasy and innocence?

So I just did what all stellar parents do in these situations: I acted like I didn't hear her and started talking up how much fun she will have at her soccer clinic tonight. Maybe she'll forget the entire conversation. Somehow I doubt it.

I'm sure the Santa question will be next.