The imperfect subjunctive: is "If I could fly..." correct?

If I were trying to write in a formal tone, I would probably write "If I were able to fly..." instead; however, I'm not sure that the original phrase is truly incorrect. Is it valid to use the preterite in place of what I take to be the proper imperfect subjunctive ("were" with the infinitive)?

is "If I could fly..." correct?

Yes. The use of could here is (already) a (correct) use of the subjunctive.

Thesaurus.com:

Could is also used to form hypothetical or conditional statements (in what’s called the subjunctive mood), as in If you could have any superpower, what would it be?

Merriam-Webster:

What is the subjunctive mood? ...

The subjunctive mood is for expressing wishes, proposals, suggestions, or imagined situations, as in "I wish I could look at that fabulous cat all day."

You write:

Is it valid to use the preterite in place

But the could in "If I could fly" is not a use of the preterite. Instead and to repeat, it is (already) a (correct) use of the subjunctive.