The kids each get an Easter basket with plastic eggs, candy, etc. from Grandma every year. Once empty, the baskets and plastic eggs are given back to be re-used the following year. It's a practical, German thing

We tell them why we give gifts on Easter and Christmas -- to celebrate the two great Church feast days. They all know very well what Christmas is about, as well as Easter. So "mission accomplished" there. So our children understand that it's good for there to be so much candy associated with Easter, since that's a good way to celebrate a feast day.
We also break out a sweetened kids cereal (Lucky Charms, Trix, etc.) on their saints' days and other important feast days. Catholics have always involved food in their celebrations of feast days, right?
The tooth fairy is ignored. We give our children a popsicle or something equivalent to help ease the horrors of losing a tooth. It would seem almost wrong to not do SOMETHING to make the whole thing less distasteful. It's a small, inexpensive gesture to give them something to look forward to.