Cool one! Albeit I think the diamond ring in a chocolate bar can be a little bit dangerous.
We have traditionally hidden the gifts and made a trail of hints and clues hidden in puzzles, to make it more interesting for the kids. (Edit: the clues usually come in a message from "one of Santa's helpers") I guess it was originally my father who started it. I'm trying to follow in his footsteps, with a varying degree of success. It used to work best when they were under 10 years though.
I'm hoping my kids will in turn follow suit when they have kids of their own.
Yes, especially if she had actually chipped her tooth! It makes for good memories now though. I can't tell you hoe many times that story has been told. I like the treasure hunt aspect that you have going on also . It just makes for such good memories!