I read the Hobbit and Narnia as an 8-9 year old. They are absolutely children's books.
We need to stop thinking "children's book" = "picture book". That's not true.
A Series of Unfortunate Events is a children's book series.
Narnia is a children's book series.
The Hobbit is a children's book.
Watership Down is a children's book.
The Jungle Book is a children's book.
A Secret Garden is a children's book.
A Little Princess is a children's book.
Animorphs is a children's book series.
Hatchet is a children's book.
Bud, Not Buddy is a children's book.
The Day No Pigs Would Die is a children's book.
Charlotte's Web is a children's book.
Ramona Quimby, Age 8 is a children's book.
Alice in Wonderland is a children's book.
Out Of The Dust is a children's book.
Many of these books have won children's book awards for being such good children's books. None of them are picture books though. I have read all of these as a child. And a lot of these books contain death, because that is not inappropriate for children, it's part of life and children need to learn about it. These books contain stuff like abuse, racism, hunting, battle, survival, suffering, and other things I've heard some people say children should not be "exposed to". Reading about them in these books did not do me harm, in fact it did a lot of good because it taught me about those things and that they can be survived and are extant and there are words for them. Which is part of what books are supposed to do!
Any book written for children, pictures or no, is a children's book. Large thin picture books that rhyme are not the only thing that counts as a children's book. Those are picture books. The ones specifically designed for reading practise are traditionally called readers. Cat in the Hat is a reader, a picture book, AND a children's book. The Talking Eggs is a picture book and a children's book. There used to be readers that did not have pictures!
You need to read stuff that has death and upsetting things in it in order to understand those things exist and how people might cope with them. You cannot just go around saying that children should only read Dick and Jane. Have you MET a child, do you REMEMBER being a child??? Being a kid is often horrifying.
We do not tell stories about monsters to tell kids there's monsters in the world--they know that, they experience that every day. We tell them stories about monsters to show them kids like them and unlike them experience the monsters and survive, sometimes even defeat them.
If you were taught three-cueing you do not know how to read. I am sorry your adults so PROFOUNDLY failed you but guessing is not literacy. This is a series that helped me a lot as a kid.