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I definitely wouldn't redesign it, it would lose its charm.
As for the monetization - what about placing some targeted affiliate links on each part of the "Magic World"? If you get a good ranking on "advent calenders", find an affiliate selling advent calendars.
As for the AdSense - frankly, it just doesn't fit there, above all because of the non-matching fonts (Comic Sans vs Arial).
Generally I'd say text links (whether sold links or affiliate promotions) are the way to go.
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