Kenneth Grahame is best known for Wind in the Willows but for young children I think The Reluctant Dragon is more accessible. Both have been published in abridged editions and this makes the essence of the stories and their plot details readily available to children, but they inevitably lose some Grahame's wonderful language and turn of phrase. I like the abridged version of The Reluctant Dragon that Inga Moore has created. Her illustrations show the very gentle dragon who really doesn't want to behave in the more stereotypical dragon manner.
A newer book, Kenny and the Dragon by Tony DiTerlizzi of Spiderwick fame is inspired by Grahame's Reluctant Dragon. This is the story of a rabbit called Kenneth (Kenny) and his two friends, George who is a bookshop owner and retired dragonslayer, and Grahame who is a dragon who enjoys reading poetry. While this spoof is not as literary as the original it is easier to read and children will read it themselves! It too, is worth a look just for the illustrations.