First of all, there are many examples of poskim who lived (and died) under Christian rule stretching their imaginations to soften the harshness with which we are supposed to treat Avoda Zuruh. Nu, they had to live.
Second, whether or not a Jew is permitted to give candy seems almost irrelevant to me. As far as I am concerned, whether or not I am permitted to do it, I would rather not and I would rather not have to prove my humanness by participating in a holiday that through and through is Sheketz.
Finally, I would love to hear what a non-American possek will have to say about this as I tend to view the opinions from E”Y as not being tainted by the shmutz of golus. What would R’ Chaim say?