SHOULD WE cancel Halloween? Mayor Jane Byrne of Chicago, scene of the Tylenol tragedies, has warned parents to exercise extreme caution on the annual ghost and goblin day. If she had young children, the mayor said, she wouldn't let them accept any candy or food. Other officials in the Midwest have banned trick-or-treating completely. Parading pirates and scary skeletons in some towns will be whisked off the streets to attend well-lighted and well-chaperoned community parties. Others, deprived of their right to frighten and feed, may elect to sit Linus-like in some field and wait for the Great Pumpkin to bring rewards.

Even without the Tylenol scare, there are problems with Halloween. Some people want to move the date around to suit weekend schedules, while anyone with a sense of history and tradition knows it's Oct. 31, a Sunday this year, convenient or not. Other folks worry because the kids eat too much junk. The leftovers, squirreled away in a brown bag, are usually found congealed and moldy shortly after Christmas. And there are always a few almost-teen-agers whose "pranks" are more headache than holiday.

But for the 4-, 6- and 8-year-olds, it's a glorious evening, a chance to assume a whole new identity, to frighten the neighbors with a false nose and a gimlet eye, to be Superman or a beautiful ballerina. Who would rob kids of these memories for fear that they will be harmed, even killed, by a neighbor? Worse, who would encourage them to believe that no one can be trusted, that fresh fruit and homemade cookies can be lethal, that ordinary human beings are more frightening than witches and monsters?

Let's keep the fantasy and the fun and, above all, the innocence of our children. Be prudent but not paranoid. Walk with the costumed crowd, or send along a big brother or sister. Confine visits to homes of neighbors and friends you know. If that's not possible, bring your children to be admired by Grandma or your friends from the office. If you restrict them to collecting for UNICEF, have some treats ready at home.