I did something similar to what atom3624 is suggesting a couple of years ago. I made an oval of track on wood the size needed for our tree. I left a little bit extra on the outside of the track and bought some LED's on a wire with a 2xAA battery box attached from the pound shop and drilled holes around the track and pushed the LED lights through.
I then set about decorating the train with various pound shop Christmas accessories, magazine pictures and cardboard. For example, they had little Santa flashing light badges that I stuck to the sides of an engine with black tack. I cut pictures of a sleigh from a magazine and stuck it to cardboard and then stuck it to the sides of an open wagon which made it look like a sleigh and added a Santa which was a cake top decoration. I bought some old Hornby station platforms for a £1 each at a fair and had a little station at the front which I decorated. Etc. Etc. Ideas on doing this are limitless. This would be a fun thing to do with a small child and you can actually undo anything you've done and get your train set back - if you want to.
Be careful though you might get hooked and become a railway modeller!