I have no idea who decided to make this a picture book. It is a perfectly fine short story in McKinley's usual style; i.e. not decipherable by little kids. Even her YA novels I found more enjoyable as an adult. I can't imagine a younger child following sentences like,
by its individual geography the land was a little more arable than much of what lay near it. The pages are mostly full text with only occasional "illustrations" between them, and the the illustrations were more like paintings inspired by the story than depictions of the narrative. I liked some of them (Clapp is good with color and landscape, not so much with people and animals) but didn't feel they added much. The titular Stone Fey wasn't very well developed. The sheep dog was the best character.