1) Agreed. That's why we don't "celebrate" Halloween...my kids just dress like Disney characters or something, and get candy. We're not going to be the kind of parents that lock the shutters tight and make our kids be pariahs that don't Trick or Treat.
2) We use it as a chance to minister. I wrote up 8-1/2 x 11 fold up that I slip into the bag of any kid dressed scary or horrific that tells them that at my house they DID get candy, and also that God loves them for who they are and that they should aim higher than playing at evil. They may throw it out, but they may read it...and they know I didn't stiff them for candy, which would let them dismiss Christianity as being nose-in-the-air "I'm better than you."
3) Since my kids actually mix with other sinners (because, aren't we all?) they may have the chance to witness to others about "dark" costumes and a loving God who loves them. Everybody wins.
I’ll stick with Scripture all the same:
“Take no part in the unfruitful works of darkness, but instead expose them” Eph 5:11
“You adulterous people! Do you not know that friendship with the world is enmity with God? Therefore whoever wishes to be a friend of the world makes himself an enemy of God.” - James 4:4
While your kids may dress up like disney characters, you’re still lending approval towards the event, which is celebrated by death, zombies, and the grave. That your kids dress up differently does not change what Halloween is. An analogy would be “My kids celebrate Hannukah, but they only play with dreidles, they don’t actually light a minorah!” You’re still partnering with it.
Re: your points 2 and 3, we differ in our idea of ministry approach, so I can’t comment without risking a flame war.
That sure sounds like celebrating Halloween to me. Why not just relax, enjoy it, and forget about the dark origins, which is irrelevant since most of us are in it for the candy.