I am usually quite careful about which movies my daughter (currently 7) gets to see, and I usually use this site as my primary source of guidance. We saw this dvd title at Blockbuster and rented it without doing the research because my daughter enjoyed the other G rated "Lassie" film. BIG MISTAKE! My daughter loves animals, especially dogs, but I would not say she is overly sensitive. She has seen other movies with some danger and peril to animals, and came through fine, without any tears or looking away. (In fact, there have been movies where her friends have walked out, claiming to be too scared, where she was perfectly fine.)
THIS film was a different story, however. Parents need to know that one adorable little dog, a playful, sweet, friend to Lassie, is beaten to death with a club by some thugs who steal money from and attack its owner (a kind but helpless dwarf). It is a horrendous scene, and seemingly so unnecessary to the storytelling. It does not even move the plot forward and seems quite gratuitous. And then Lassie has to travel a tremendous distance, from Scotland to England, and when she arrives back home, she is near death. This was all very intense and nightmare-inducing for my daughter and I regret that she saw it.
It is a decent movie over all -- good, but not great. The cinematography is probably the best part. But please be warned. You may want to wait until your child is older or skip it altogether. There are much better family films out there with animals (such as Homeward Bound, or Garfield, just to name a couple).