Definitely need your players on board with the setting.
But for ideas:
One is that druids as a class, and kitsune as a race, might start play in animal form. A druid would pick an animal form to be their base form.. and when they gain wild shape they could learn how to take humanoid forms. It works well for the talking fairy animals theme. Same with Kitsune of any class - start out in fox form, and have to take a feat to become humanoid, analogous to taking fox form as a feat for a normal character. Might work for nagaji druids too.
Characters of the above types could also work with a number of fairy tale themes, like transformed princes/princesses, magically cursed folk, etc. For such characters getting their forms unlocked, have something happen in the flow of the story to allow it - then require them to take the associated feat at their level-up.
As far as magic goes... I've never had the impression magic is only evil. Fairy tales are full of fairy godmothers, wizards, good magicians/sorceresses/etc. They're just usually noted in passing or in the background. Much like university professors and scholars in real life: there's lots of them out there, but its generally the ones that do something bad that you hear about (assuming you're outside their scholarly social circles).
In stories the good wizard might be the object of the protagonist's quest, struggling to reach them to fix some problem or lift an enchantment. Or they might be the master/teacher of the hero, while the latter gets into trouble when they're not around or on some errand they were sent to complete. In a fairy tale setting campaign goodly magic workers fit in just fine. They can take commissions from the heroes just like a normal pathfinder campaign, to make them magical things to help them (armor, weapons, potions, etc.). They can also be adventure hooks, sources of lore, frequent quest-givers to send them to collect this mystical plant/animal, that lost relic, explore unknown places, and so on.
Dwarves in fairy tales: I generally think of some sullen or reclusive, inherently magical beings, very tied to the earth (or rarely fire) usually resentful of intrusion or indifferent to the outside world, and very hardworking. Generally not as slaves, forced to work, or working out of loyalty.. but because its simply their nature. And usually steeped in unfathomable knowledge of the crafting of powerful magical things. Though it does depend on what stories you're reading.