I think a lot of kids have that N and L issue, I know I had it for several of my early years, along with a backwards S on occasion. keeping the magic in kids early life I think is fine, reality can be pretty harsh at times for kids, so nothing wrong with santa, the easter bunny, or the tooth fairy. By ten most kids are past all that anyway.
I think early writing does tend to help a person become a better reader, and then you have a simple genesis machine where one skill enhances the other skill, and builds a third skill, the imagination.