I came across something that had favorite works of characters.
And another was:
Is this simply a way of not actually putting the titles to avoid copyright issues? Is this common?
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It is, and it is. It's a way to make references to well-known works without the legal headaches that using the actual copyrighted title would. This is quite common in parodies - Gintama for example has used this trick to no end; the anime does this instead by bleeping out a syllable or two as the character states the name.
I could be wrong, but from my experience it seems like the kind of thing that would be out-of-place in more serious works. I can't remember seeing it used for anything other than humorous effect, but I don't know that that never happens.
Names of celebrities and other famous people often get similar treatment.