I know this is an old thread but my son was sad about Puff so I sang a different ending. This song made me sad when I first heard it as a kid too and although I understand learning about the sadness of the end of innocence now that I have a child I know about NEW innocence and learning as a parent to help keep that innocence alive as long as possible so

Well little Jackie Paper he met a pretty lass
And together they had a little boy who had a lot of sass
Little Jackie Jr well he found that rascal Puff
and brought him wings and movie tapes and other fancy stuff
(Chorus)

Jackie Jr and mighty Puff, they became fast friends
And Puff realized that when there’s love friendship never ends
With his faith restored Puff could roar once more
And now with all his future friends he’ll be brave forever more.

When I finish the song I make it present tense. Puff the magic dragon LIVES by the sea and FROLICS in the autumn mist in a land called Honalee.