I've never liked it in itself. It has one fundamental flaw if you know any folklore.
Namely, if it's true, it's false, and therefore can't be true. Because if there's one thing that all the folklore agrees on is that the creatures really are there and independent of us. (Or were there and went away only when they died or otherwise did something a real and existing being would do.) So as soon as we believed in their real existence, they would be independent of our belief. It they continued to be molded by it -- obviously some part of them is independent of our beliefs.
I can see their feigning it, as a disguise. But not actually being it.