I know when most people think magical realism, they do think Latin America, of course. That's what I mostly associate it with. As for North America, Sherman Alexie writes magical realism, but he's hardly part of the Western hegemony (being Native and so part of the colonized world).

It's like isolated unexplainable (magical) incidents that are treated by the story (and often the characters as well) as completely normal--all taking place in the completely knowable, real world.

I'm just saying, I've read fantasy novels that would meet all of those qualifications. I just think that the lines between the two are not always distinct, you know? And definitely not enough for one to be valuable and the other worthless.