If it helps get them interested in reading then I think its great. They could go a step further in the school by getting the kid to read a page or two out loud, from the book, in the style of the character they're portraying.
The difference between fiction and reality? Fiction has to make sense. 10
One young girl dressed as a witch came into my shop after school and I asked her what they had done. Apparently nothing different to normal, no discussion about the characters they were dressed as, no emphasis on books just another day of costing parents more money for no educational gain.