Did you know that faerie is just an annoying way of writing fairy? Spelling doesn't normally bother me, but spelling a word differently ONLY because it LOOKS more poetic or some shit like that really gets to me. It's said the same, it means the same, it IS the same. I don't care when people say Jack or Jaque, but I hate it when people spell it something like Djak (and I know somebody who spells his name like that, or he used to). It's a fairy.
I mean, if you lived in old england/france and spoke old english/french as a first langauge, I might forgive you. But you don't. It's pseudo-archaism. It's fluff. Superfluous. Thee talketh over Faeries in Ye Olde Shoppe.
My anger aside, the idea is OK. Not bad, but not really great. I mean, why would they be depicted as something if they were real things? If you can kill a fairy, why would you not be able to have a real picture of it? I like having holidays as it would put more meaning to a party, and I (unlike other people here) don't mind parties in my fort. I like having a fort be a lively place not solely dedicated to some sort of "winning" structure. If I can have a party with more than half my dwarves, I'm successful. But why celebrate fairies in the first place? Why not the gods they already worship? Why not a change in the season? The come of the dwarven caravan? The lack of an elven caravan leaving? A fairy seems pretty low on everybody's list in what people would celebrate.
We don't celebrate Santa Claus at christmas. Most of us celebrate nothing really at all other than the fact that it's christmas. People who do celebrate something on christmas celebrate Jesus (or something like that, I don't really pay attention). Santa is an image we associate with christmas, not the other way around.
We don't do anything with the tooth fairy. Frankly I don't even know why people believe in that one. I know I didn't when I was young. Also fairy is a strange term to use for things like skinless dimetrodons. That's like calling a cow a sort of nymph, or calling a chocolate cake a nix*.
If a fairy is a mythical story creature that may be associated with a holiday, then we need holidays first. After that, why? What does a mythical creature add if it isn't actually in the game. It'll be on engravings. Maybe that's enough. A goblin walking home after being embarassed in battle and swatting a bunch of fairies away because they're bitches would be a funny engraving. But we need better engravings first.
*Nymphs and Nixes are different. A nymph is a nature-spirit, while a nix is a water-spirit. A mermaid is also a water-spirit, but not as much a spirit as it is a mythical creature.