We read the "Classic Starts" edition of Pinocchio, which was "retold from the Carlo Collodi original" by Tania Zamorsky. This was a perfect intro to this story for my little one, who listened to each chapter with big round eyes and always wanted to find out what happened next. It made for good conversation, too ("Do you think Fox and Cat are really Pinocchio's friends?"). It introduced to her tough concepts, like the fact that some people pretend to be your friends when they just want something you have, and that really bad things can happen if you're not a good listener - but it still felt gentle enough for her, partly because P is a puppet and not a real child.
I urged my husband F to go see if the library had more in this series, and they do - but they're marked as being ideal for a child aged 7-9 or something. I'm not sure if that's because of reading level or because of themes, but it's put us off checking out another one. The "reading aloud" level seemed a little high for my girl (at three and a half) but not so high that she wasn't interested or didn't understand; she definitely missed some things, but she was very engaged and asked questions, so it wasn't all over her head. I do worry a lot about introducing her to themes she's not ready for, or content that will scare her. Maybe we'll try another of this series in a few months.