I'm planning on getting my daughter the ABC Book of Shadows book.
http://www.spellsofmagic.com/shop_details.html?c=B&s=Kids%2c+Craftwork+%26+Design&id=5328 That is if I can find it lol. I looked at some images on google about the book and it looks really cute. If you find any other please let me know as i'm in search of some books as well.
Also congrats, and get as much sleep as both of you can before baby is born. Trust me you'll be glad you did, lol. :P
I've come into this same problem with my own daughter. To be honest, I ended up writing many of my own stories for her during the sabbats. Much of the pagan literature out there is geared toward older kids or adults and is more informative than anything. My best advice to you is to stick to the older children's literature like Aesop as well as Disney which is surprisingly full of very pagan themes and lots of magic in a positive light. Look at the movie Fantasia as an excellent example. I love that movie!
Spiderwick is also excellently done FICTION that really brought to life the "little people" for my daughter to grasp. There is both literature and a movie.