OK, I can see when a grandparent wants their grandchildren brought up properly, but that's crossing the line. No wait, that's going long, tripping over the line and tumbling into a heap 15 feet past the line.
Sure, my grandmother wanted (and still wants) me to understand her faith and I do get far too many religious lectures from her - how do I dread it when she asks me when I went to church last, those conversations never end well. But she's never, ever tried to go against my parents with her beliefs. Of course, it might help that my parents are both Anglican, as am I, and my grandmother is a diehard Anglican, but that's besides the point. My grandmother never tried to scare me about religion or destroy my childhood by telling me that Santa Claus isn't real or anything else like that. And you know what, without any intrusive religious propaganda, I turned out just fine, imagine that.
And with regards to telling your kids that Santa Claus is real, I don't see the harm in it. When I was little, I believed that Jem and the Holograms were real because I really liked that TV show, but it didn't ruin my life when I realized that it was a cartoon and not real. I grew up believing that Santa Claus came to my house every Christmas Eve and left some presents for me and my family, and you know what, when I got older and understood that Santa Claus doesn't really exist, it didn't bother me at all. I never felt shocked or wronged, I never felt deceived, I just felt like I was privy to something that grown-ups knew about and I liked it, it gave me the opportunity to help out and bring the magic of Santa Claus to younger children that I knew, like my younger cousins. Believing in Santa Claus has had no negative effects on me and I never felt like my parents deceived me about it. Even when I got a little older and my friends said, "Do you believe in Santa?", knowing that he didn't exist, my favourite answer was always, "I believe in the spirit of Christmas," and you know what, I still do. Santa Claus is just part of a very warm and very magical season. And believe me, when I get home for the holidays, one of the first things I'm going to do is dig out my fluffy red Santa hat.
I think it's all innocent fun, believing in Santa Claus, something magical for children to believe in, something they can imagine. I mean, really, growing up means that the world isn't magical anymore, reality is cold and harsh and really not all that fun at all, so why make children grow up sooner than they need to?? Let them believe in Santa Claus and the magic of Christmas, let them have their fun and be carefree children while they still can. The real world isn't fun, there's no magic, reality really does bite, so don't force them into the real world until it's absolutely necessary.