I read all different things to AJ. I think a 6-8 year old would be able to read that story, but also their parents would be able to read it to them. I read books to AJ that are for 6-8 year olds I guess. He can't read them, but he can listen. Whether he understands it, I'm unsure of, but I still read them. I have some favorites that get read more than others, maybe one day they'll be etched into his brain from my reading them over and over.
I would read him this story and when he was old enough he would be able to read it on his own. You have to think though, Has Christian Anderson didn't write stories to the just kids to read themselves, he wrote them for the parents to read TO the kids. To convey the message that if you were bad, you would get eaten. It was about the moral, not so much the ability to read. (All kids should be able to read though, thats not what I'm saying). Its about the moral and the bonding of a parent reading to a child. Thats the way I see it though.
My new favorite kids book is A Pocket Full of Kisses, by Audrey Penn. Its fantastic.