In my GPC, magic is relatively low-key... true magic is generally not showy, and can often be explained away. We're currently in 492, long before the enchantment of Britannia.

That said, a couple of my PCs have decided to go hunting the fae in a forest where a man was mysteriously and savagely killed during a hunt... possibly alongside a young Prince Anguish.

It seems a bit anti-climactic to say "you find nothing". It doesn't really fit the feel for them to find a pitched battle with one of the Good Folk.

Anyone have any suggestions for a good, evocative middle ground, perhaps something that foreshadows or leads into their meeting with Merlin later in the year?

This sounds like a good time for a White Stag, with the right passions and trait rolls. e.g cruel if they shoot it. This could have possible affects later when they meet the Fae later.

492 is the year that the sample adventure from one of the early editions occurs. The knights participate in a hunt on the fringes of the Perilous Forest, where they have the opportunity to witness young Prince Pellinore's first encounter with the Glatisant...

Regards
Luke