One of the more controversial uses of literary magic is the magic found in myths. It's more than just faeries and monsters, myths have gods and demons and supernatural powers. Surely reading and studying myths could stray very quickly into the realm to the idolatrous and blasphemous. And, while I suppose any unhealthy obsession cavorts into the realm of the idolatrous I would argue that reading, studying, and enjoying myths is not a bad thing.
I have two reasons for thinking that mythology is not particularly dangerous for the modern Christian. The first is relatively simple. Just as modern people tend to scoff at the idea that any one really believed in faeries, so too we tend to scoff at the idea that anyone really believed in gods like Zeus and Thor. It's hard to be trapped or deceived by what was undoubtedly a false religion when you've become culturally convinced that, not only are these stories not true, they're utterly fantastic and impossible.
My second reason for believing that myths are not particularly harmful, and in fact should be read and enjoyd by Christians is a little more complex. I think its important to first establish what a myth is. Myths are widely misunderstood today as being synonymous with a falsehood. in reality a myth is best defined as a spiritual/ significant history of a people. The story of Paul Bunyan is not a myth, but it could be argued that the story of America's founding has become something of a myth (and let me reiterate that the concept of a myth as a falsehood is a very 18th century concept). The story of Rapunzel is not a myth, but the story of Virgil's Aeneid or Homer's Odyssey are.
A myth functions to give a people a spiritual and culturally significant identity. The magic and the monsters within myths are reflections of man's spiritual longings. As Christians do we believe that the mythologies of other cultures reflect reality as such? No, but I believe that they do reflect an important aspect of man as the image of God. It is ingrained in us as humans to seek spiritual explanations for why things are the way they are. Why are we here? Where did we come from? Where did everything come from? Why do bad things happen? What does it mean to be human? Myths are the creative ways people groups have expressed answers to these questions. They were the pagans way of attempting to articulate answers to spiritual questions.
C.S. Lewis held that mythologies were the 'good dreams' of the pagans, something akin to general revelation. Any in depth study of a culture's myths should reveal at least a few similarities between the pagan stories and a Christian understanding of the world. Lewis noticed it between the dying and resurrecting gods (Balder and Dionysus) and Christ. In fact, the similarities between some mythic figures and Christ actually made him doubt the validity of Christianity. Wasn't Christianity just another myth? Wasn't Christ just another dying god? Tolkien gave him what I consider to be a brilliant answer: yes and no. Yes, the story of Christ, the gospel itself is a myth (a god who loves man lives among men, dies for them, and rises again), but no, it is not just another myth. It is THE myth, the myth that became fact, the myth that entered history. The spiritual longing that was expressed in pagan myth, the truths that they found and waited for, were fulfilled in Christ (which is, I think, an appropriate thing to remember in the Epiphany season). Pagan myths expressed (in a fallen way) a spiritual longing that God fulfilled.
There is no reason for Christians to not read myth, in fact I think (beyond the literary merit they possess) it is an act of charity and compassion for Christians to read and study both ancient myths (to appreciate the spiritual search of those who came before us) and the myths of those modern people groups who have not yet received the gospel. I am of the opinion 1. That this is given precedent in the Bible itself (Paul obviously knew Greek and Roman mythologies well enough to use them in his gospel presentation in Athens) , and 2. It is one of the best ways to get to know a people group. A culture's myths tell you what they value, what they believe, who they think they are, and where they think they come from. It can allow a person to truly understand and appreciate a person who is culturally foreign, and to find a way to present the gospel that affirms what a culture already knows to be true, affirms what is already good within that culture, and offers answers that the members of a particular culture are actually searching for.
That turned in to a bit if a sermon, but I think that's important when it comes to myths. Do myths contain depictions of false gods and magic and morals that Christsins find problematic? Naturally. But they are also inherently valuable. They are a sort of mystical summation of a culture's spiritual journey, metaphysics in story. And our God is a God of myth, a God of story, so should we really expect anything less from creatures made in His image?