I thought much of the book was lampooning the 'Disneyfication' of fairy tales. I think the only Disney films that I actually enjoyed was The Aristocats and Jungle Book, both for the music*, and 101 Dalmatians.
Terry didn't just destroy them. He picked up the Disney fairy tales, shook them down until their teeth fell out, mugged them for any loose change, and then barbecued whatever was left.
I get a feeling (from reading Terry's other books, e.g. "Lords and Ladies", "The Science of Discworld II", 'The Wee Free Men") that Terry was definitely for the old-fashioned versions of fairies (i.e. with blood and 'orrible murder), and thus against the Disney interpretation (i.e. making fairies twee).
I agree. Fairies are not, and shouldn't be, twee. They were created by parents to warn their children to stay away from dangerous situations. The problem is, if you say "Stay away from the river because you might fall in and drown," children might not understand (especially very young kids). But if you say, "Stay away from the river because Jenny Green-teeth will get you," any child will understand that.
The idea of fairies is much older than Jenny Green-teeth, of course. I'm just using her because she's so familiar. I've noticed similarities between her and the Slavic Rusalka, the Australian Aboriginal Bunyip and the Japanese Kappa.
Wikipedia mentions another similar figure: in Jamaican folklore there is a figure called the River Mumma, who lives at the fountainhead of large rivers in Jamaica and sits on top of a rock, combing her long black hair with a gold comb. Does this remind anyone else of the Irish Banshee? Just wondering.
One last thing: I don't recall any fairies in Tolkien (I may be wrong? Please correct me), but Tolkien's elves - at least in "The Hobbit" - were problematic. The elves from Rivendell are friendly enough, if a little silly; but the elves in Mirkwood, led by Thranduil, are taciturn, sullen and unfriendly. They are much closer to what fairies in the old legends were, complete with the food-that-disappears-when-you-get-close. (Then again, consider how dangerous Mirkwood was...)
No wonder Gandalf tells the dwarfs not to deviate from the path through the forest. Peter Jackson's films tried hard to portray how claustrophobic Mirkwood is, but I think Tim Burton would've done a better job.
Anyway, sorry - I've been digressing for way too long. *blush* What do you think?