I remember reading something from Eric Shanower where he said he thought Oz was real when he was a kid, too. I never did, but then, I was eleven when I read my first Oz book, and I know many fans were younger.

I kind of think that, with the rise in nerds who take things really seriously despite knowing they're fictional (think the Comic Book Guy from The Simpsons), literal-minded fantasy lovers aren't as rare as they might have been at one time. Perhaps it's more common among science fiction and comic fans, but there's some overlap there.