I can attest that while a Red Dot scope can work, a magnified scope is my choice. I recently had the pleasure of shooting a Ten Point Crossbow with Nikon's Bolt XR mounted onit and was I impressed.
Not only myself, but about 100 other guys as well. All got to shoot using the BDC reticleof the Bolt XR and everyone had a smile on their face after pulling the trigger.
Just so happens the Nikon Bolt XR has a mail in rebate when you buy one form an Authorized Nikon Dealer.

Here's a link to get the rebate.

http://www.nikonpromo.com/step_up_with_bolt_xr.html

Drop me a note if you have any questions.
Bart
Nikon Pro Staff