Yet, with all the commercialism and misunderstanding surrounding Halloween, the question comes up, how should the Christian celebrate Halloween? I think to answer this question it is important to come to understand what Halloween is about and where it came from. Only then can the question of how to celebrate it be answered.
Not to bore people to death, but in order to understand what something is, sometimes we need to break up the word we use to describe it or trace the etymology of the word back to its original significance. "Halloween" actually stems from "Hallowe'en" which is a shortened form of "All Hallows Even," which in today's English might be better put as "All Saints Eve."
So, the name Halloween itself is religious. In which case, the question arises, where did all the candy and tricker-treating come from, the dressing up in costumes and the association of Halloween with evil? To answer this, we have to do a bit of history.
The Feast of All Saints' was not always celebrated Novemeber 1st with a vigil on October 31st. Rather, back in the 800's this pre-existing feast was moved to Novemeber 1st to coincide with the Celtic holiday of Samhain. Samhain was the Celtic new year, a day upon which the viel between the spirit world and the physical world was at its thinnest, and, as such, it was believed that the spirits of deceased loved ones would come back and visit their families. Because of the possibility of meeting an evil spirit, people in Ireland did not go out on Samhain night, at least not without something to ward off evil (either a bonfire or a costume... it said of the Irish lengendary figure Cuchalain that he wore a costume when dared to go outside on Samhain night). Besides lighting candles so that the souls of their loved ones would find their way home, pagan families would make cakes for the souls of their loved ones to eat. What a treat! Later, these cakes were given to the poor to pray for the dead or even given to children who dressed up in costumes. According to ancient Celtic custom, Samhain was not celebrated on a fixed date. Instead it was always considered to be on the full moon in the astrological sign of Scorpio (late Oct, early Nov).
All Saints' was moved to November 1st and All Souls set on November 2nd specifically to be associated with the beliefs about the dead still prevalent from Celtic religion. This was done not necessarily to baptize pagan beliefs - the belief in the communion of saints and of praying for the dead preexists Christianity's contact with the Celtic peoples who celebrated Samhain, so no one can claim that these elements in Christianity are pagan - but rather to instruct the Christian teaching to a people who were no longer celebrating the customs associated with Samhain for religious purposes, but rather for cultural or superstitious purposes. That is, the places where the traditions behind Samhain were still being practiced were already largely "Christian" for several centuries by the time the commemoration of All the Saints on November 1st was extended to the whole Church during the pontificate of Gregory IV (827-844). For example, most people do not put up holly in winter because of a belief in the pagan celebration of Yule, but rather because it was simply something handed down. Likewise, the celebrations surrounding Samhain were still present, and the church looked to give these a proper Christian orientation. Since man of these customs were not necessarily "wrong," but simply in need of fulfillment with the message of the gospel, there was no need to do away with the commemoration of the dead, just simply need to catechize the people by means of a feast.
It is interesting to note, that in the face of the question from the Celtic cultures of the relationship between the spiritual realm and the physical realm, the church emphasized, first and foremost, the saints! This affirmed what the Celtic religion had believed, that there is an interaction between the dead and the living, although for the Christian it is an interaction not limited to one day of the year, but a continuous interaction in the communion of saints. Not only this, but the Church emphasized that the faithful in Christ who die are not necessarily dead, but alive, alive in Christ and in heaven interceeding for us. Only later did the Church also add the Commemoration of All Souls Faithfully Departed, to underline also the teaching that he Christian is called to pray for those souls still in need of purification before entering heaven.
So, how should one celebrate Halloween. Well, first off, one should not associate it with the devil. Neither All Hallows' Eve or the Celtic Samhain had anything to do with Satan. Though the Celtic peoples tended to believe that the chances of encountering evil spirits was greater on Samhain night, the Christian knows that one is not more susceptable to evil on one over another. In other words, the battle against evil is the same everyday and God's protection and provedence is also the same everyday. Neither should one necessarily have a problem with trick or treating. By now, the dressing up in costume is not associated with scaring away evil. If anything, children can even be taught the original meaning of Halloween by dressing up as a favorite saint. When people ask what they are, their reply can even help others come to know the original meaning of Halloween. One should not, however, out of a sense of righteousness, refrain from participation in the secular celebrations of Halloween. If Pope John Paul II and Pope Benedict XVI have emphasized anything, it is the need to engage the culture around us and be bold in proclaiming the Christian message in the midst of the concrete reality of today. Nor would emphasizing the saints on Halloween be the "Christian response" to Halloween, since the message of the Saints was always being proclaimed. If anything, it would only be the faithful of today joining once more the continued message of the Church throughout the centuries in proclaiming the salvific love of Christ who is wonderful in his saints and who calls us also to be holy.
Peace and Goodness, and may you have a happy and safe All Hallows' Eve!