Quick update -
I have two kids now..and the first one continues to get more 'options' from the bear when they talk. Also, the bear has an emotion bar now (just like the baby crib) but only when the first child plays with him. The second child has not spent enough time with the bear for me to tell if the bear can have a 'relationship' with more than one sim child at a time.
Once my child got an some option (when talking to the bear) about a potion. So now i have child working on the junior wizard set. Haven't gotten the skill level great enough for a potion yet....but I'm thinking the child may be able to make a potion, offer it to the bear, and make the bear real.