@sjm: The exact quotation from the Blue Fairy re. magic dust was: “Fairy dust is the most precious substance in all the land. Its magic is what powers the world.” In other words, the dust’s magic is what powers the world, and implicitly, what gives the fairies their magic.
@cruel_fortuna: You said, “The fairies still have to pay for their magic.” I think you’re right about this. and I think that the price they have to pay is they lose their wings if they don’t grant wishes for people. Similarly, I think the dwarfs may be bound to a life of service, which may also be part of the price of magic.
"That’s how you know you’ve really got a home. When you leave it, there’s this feeling that you can’t shake. You just miss it." Neal Cassidy