Our kids: self-confident or fearful of failure?

I've been struggling with how to encourage my second-grader to try harder even when the task seems impossible. He is gifted in so many ways and because of the praise heaped on him from so many corners, seems to have an abundance of self-confidence. But he becomes almost paralyzed with fear when something requires significant effort. This fear is visible whether he's putting together a Lego set with an unusually large amount of pieces or working on a school project. His fear of failure is palpable doing those times, even as we seek to soothe him by telling him he is likely to succeed and in the event of failure, learned something that will make success more likely the next time. The whole if at first you don't succeed, try try again mantra.

I saw this article in Education Week, a newspaper devoted to education issues. It has me wondering. If we do our jobs as parents right, our kids will have more successful moments than not. But does that make them fear the prospect of fear to the point of avoiding risky efforts, such as areas they aren't strong in? How do we balance praise, the need to instill self-confidence with the reality that they will struggle at some things? So many adults play it safe, not venturing into areas that will require considerable risk, is this something our children learn from us? Is there anything wrong with that?