Thanks for the insights, folks!
With regards to fantastic elements, for what it's worth, I think I'll be going for a sort of compromise. On one hand, I think AD&D as a rules set doesn't fit Ravenloft as well as LotFP does. Monsters in Ravenloft are usually supposed to be rare, one-of-a-kind occurences, and magic is not something most people would trust, to say the least. Even magic items are supposed to be rarer than in your usual D&D game world. (I'm looking at you, Forgotten Realms!) This is why I think LotFP is a great fit. On the other hand, my play group wanted a "classic" D&D experience, meaning that early modern Europe wasn't quite what they were looking for.
Fortunately for them, there is one domain with a "generic fantasy kingdom" theme and this is where I'll start my campaign. The original Ravenloft boxed set - the "Black Box", not to be confused with the I6: Ravenloft module - features some pockets of goblins and kobolds (but no more: no orcs, ogres or the rest of the usual menagerie). I might make use of those at some point, but that's not where the campaign will focus. The players decided to play a group of rebels plotting to overthrow the domain's evil sorcerer-king, so there's a lot of political machinations to be expected, and the baddies will be less "green-skinned savages" and more "the local soldiery". All this to say I'll probably strike a balance between all-out, no holds barred fantasy and a pure historical setting.
With regards to monsters specifically, I'm thinking of copying the Monster Manual's stat blocks when appropriate. However, it occurred to me that I could simply make up, say, some sort of undead, but never actually identify them as "vampires" or "ghouls" or whatever. Maybe the locals will tell the PCs about a vampire haunting the ruins in the woods, or maybe the players will conclude that the monster they're hunting is a vampire, but I, as referee, don't even have to decide if the monster really is a vampire, an unspecified kind of undead monster that the locals call a vampire, or something even worse. I wonder what my players would say if they found out their 1st level characters were facing a (secretly 2-HD) vampire...
@Crunk Posby:
The version I have is the "Deluxe" edition. The adventures included were Tower of the Stargazer, which I will probably plug somewhere at some point, and Weird New World, which I doubt will really fit the campaign. Oh, and thanks for the module suggestions! I don't usually use modules (I must have used two in the last twenty years) but I'll check them out just to get a better feel of James Raggi's vision. It should be lots of fun!
@Storapan:
To be honest, apart from the few domains for which it's actually stated in the text, I'm not sure at all what game world most of the domains come from. Most of them have a "late medieval or early Renaissance Europe" feel to them, and I always assumed they were "lost" parts of the real world (or maybe a close enough fictitious world) that were swallowed by the Mists. All this to say that my default assumption is pretty close to your suggestion! As for Fear and Horror rules, I'm of two minds on this. I like the idea of Fear/Horror checks, or Call of Cthulhu's Sanity rules, because it reinforces the idea that characters don't react to the game's fiction in the same way as the players. However, these rules only work if players are willing to play along. If they don't, the whole thing falls apart. I kinda like the idea of Morale checks for NPCs and letting players decide how their characters react, if only as a compromise.