When we were in the beginning stages of planning our first trip (a year ago), DS(then 5) was really worried about meeting the characters. I told him that there was no reason to be worried, because they were just fun people in costumes, just like at Halloween. He felt much better, but then I joined the DIS and read a post by someone who was horrified that anyone would tell their child such a thing! (Oooooops!)
So right before our trip DS6 was worrying about the characters again, asking me, "They're really just people, right?" I said yes, but explained that I did not want him to mention this to anyone else, even DS2, because everyone likes to believe they're real characters. He promised he wouldn't ever say anything, and he never did.
He took awhile to warm up to the whole meet and greet and autograph thing, at first refusing to meet any characters. After DS2 had a few under his belt (and in his autograph repository!), I told DS6, "Gee, it's too bad you don't want to meet the characters. DS2 is going to have so many photos and autographs in his book, but I'm really not sure what we'll put in yours..."
Suddenly he was eager to meet the characters, and also seemed to really believe! He was so thrilled to meet Buzz, and positively star-struck with Captain Jack. And he blushed and made googly eyes at the princesses.
At least for DS6, I'm glad I told him. I think he would not have had fun if I hadn't. And that he is able to suspend his disbelief a few minutes in their presence. I'm also glad DS2 just accepts these characters as normal, because it is sooo much fun to see both of them with the characters!