This is a page to list books, stories, and other media that’s good inspiration for a campaign about the intersections of the real world and the fantastic:
Jonathan Strange and Mr. Norrell
Stardust by Neil Gaiman
The Magician by Lev Grossman- this might be the most important book on this list… both in terms of the world and the themes, I think this is a hugely great book.
Pretty much any good poetry.
The Chrysalids by John Wyndham
(mentioned this at our first session—post-apocalyptic community that has developed a fundamentalist devotion to racial purity as a means to preventing another apocalyptic event. pretty good plot/premise summary can be found at http://en.wikipedia.org/wiki/The_Chrysalids)
The online-serialized novel (or novel-ish thing) Tales of MU
(arguably some elements of Scout’s history owe a significant debt to this story’s protagonist, but also it has a really interesting magical universe)