Here's what I remember:
There's a bunch of little kids in a clearing and they have some kind of living thing in a bag hanging above them. One of the kids gives another a wooden stick and the kid, who is obviously trying to not look like a wuss in front of his friends, starts beating on the bag with the stick. A big blood-stain forms on the bag and when it falls, it's revealed that inside the bag is the kid's own pet rabbit! (or maybe it was his dog, but I seem to remember it being a rabbit).
AUNT JOHN SEZ: Dear readers, anyone out there care to take a swing at this one? No need for a blindfold, just leave your guesses in the comments or shoot us an email.
EARLIER: When piñatas attack!
I don't know if anyone still cares since this was posted in 09. I just joined the site and I'm excited to know with absolute certainty that the movie in question is called Celia. It was later called Celia-Child of Terror to play up the horror aspects. I found it in the horror section at a video store a long time ago but its really more of a fantasy movie. You are correct about the animal in the bag being a rabbit.
Thanks Morganen!
I've seen Celia and loved it but I could not place this scene. Thanks for your help!
You're welcome! I didn't mean to sound like a know-it-all but the movie made quite an impression on me as well!
The scene where the teacher reads the fairy tale to the class is amazing & so creepy!
http://www.youtube.com/watch?v=yP13LTDsAZo
I have to watch this again soon!