How to teach fiction

Fiction is mainly about 4 elements: PLOT, THEME, CHARACTER and SETTING. 

Let's use an example.  This is a book for very young children called The Very Hungry Caterpillar read by the author himself:
http://www.youtube.com/watch?v=eXHScpo_Vv8

PLOT: The plot involves a caterpillar eating lots of food, so the best way to focus on this would be to mark what he ate each day on a calendar.
THEME:  The caterpillar ate good foods and bad foods, and after the bad foods he got a stomachache, so the theme is what is/isn't so good to eat.  This could be done with a simple chart.  Alternatively, the teacher could read the story and have students pull their ears everytime they hear a "bad food" and touch their nose everytime they hear a "good" one...or whatever.
CHARACTER: Here you can think about the little caterpillar's family.  At the end of the book, there's a picture of him as a beautiful butterfly.  Since we look like a mix of our parents, they students could imagine what the caterpillar's mom and dad looked like.  They could also imagine the caterpillar's mom telling him what foods to eat and scolding him for eating the wrong food.
SETTING: Caterpillars live in nature, but some of the foods he eats aren't found in nature...which ones?

Now think about a story you can do with your students and see if you can come up with activities for each of the four elements.