Hi Mainiac, I'm certainly no expert in this area as I'm just getting started with fairy gardens myself, but I think dwarf hostas would be great plants to use. Most sempervivum (as miniature bushes) and sedum (as grass/groundcover) work well because of their small size. Not sure what zone you're in, but if it's a warm one haworthias look good, many miniature conifers are small enough to use, thyme, and moss. I love the way this fairy house is hidden in the plants in this picture:
http://media.oregonlive.com/hg...
Themes? I guess they're as varied as people themselves. I've seen some really cute ones that are just a garden theme with mini tools, wheelbarrows, trellis, arbors, fences, stepping stones, tiny sempervivum planted in rows like garden plants, etc. Forest themes are nice with "streams" made from colored pebbles, a hammock to relax in
tiny critters scattered around, mushrooms. Backyard themes with picnic tables, swings, birdhouses, table and chairs, etc. The fact that you're using a half barrel is great because you'll have so much room to work with!
Please be sure to post pictures. I'd love to see what you come up with!