I have a son, aged four, and a daughter, aged nine, who both love to watch wrestling on TV. I know that it is fake and all that good stuff. Don't misunderstand me--the wrestlers are good athletes and actors, but my wife feels that our kids should not be allowed to watch it and that the little guy shouldn't even have the action figures to play with. Will watching or playing with the toys have any bad effects?
There is NO redeeming value to the wrestling found on TV these days. I would strongly recommend that you not allow your kids to watch wrestling, either alone or with adults. Staged or not, your nine-year-old and especially your four-year-old still do not distinguish fantasy from reality on a consistent basis. What are they learning from watching these sexist, racist, violent shows? Wrestling's ongoing, soap opera-like "story lines" are laced with simulated drug-taking and sex, profane language and gestures, bloodletting violence...need I go on?
I would also recommend that you not provide either child with wrestling action figures or any other paraphernalia linked to wrestling. They will use the action figures to imitate what they see on TV. That's not imaginative, creative play--it's just repeating the senseless violence and shameful behavior they witness on TV wrestling.
When kids grow up watching endless hours of gratuitous violence, they do become desensitized to violent behavior, both as a perpetrator of violence and as an observer of violent acts. It's up to you to remove the addicting substance--in this case, take away this unhealthy programming from your children.