LifeSite is to blame, it seems, having dug up a couple of brief letters from two years ago in which then Cardinal Ratzinger thanks a German writer for sending him a copy of her book Harry Potter - gut oder böse (Harry Potter- good or evil?).
What did Ratzinger say to create all this fuss? This is it:
Many thanks for your kind letter of February 20th and the informative book which you sent me in the same mail. It is good, that you enlighten people about Harry Potter, because those are subtle seductions, which act unnoticed and by this deeply distort Christianity in the soul, before it can grow properly.
Now, from what I can make out, it seems unlikely to me that Ratzinger has read any of the Harry Potter books, nor did he go out of his way to make any statement on them. He simply replied to a letter by the author of this book saying in moderately generic terms that she was doing good work.
Needless to say, papal opinions on light fiction are not binding on Catholics, and it would be well if both LifeSite and the mainstream press would keep that in mind. Unfortunately, certain people seem all to willing to grab this as a major statement in order to support their own opinions. Here's author Michael O'Brien, quoted in the LifeSite article:
The most prominent Potter critic in North America, Catholic novelist and painter Michael O'Brien commented to LifeSiteNews.com on the "judgement" of now-Pope Benedict saying, "This discernment on the part of Benedict XVI reveals the Holy Father's depth and wide ranging gifts of spiritual discernment." O'Brien, author of a book dealing with fantasy literature for children added, "it is consistent with many of the statements he's been making since his election to the Chair of Peter, indeed for the past 20 years - a probing accurate read of the massing spiritual warfare that is moving to a new level of struggle in western civilization. He is a man in whom a prodigious intellect is integrated with great spiritual gifts. He is the father of the universal church and we would do well to listen to him."
The Anchoress has a good discussion of the "Harry Potter issue" on her site.
Amy Welborn also has a thread.
Finally, Pontification offers some sound reflections, and Pontificator's daughter profices some good thoughts from a younger reader's point of view.