Lil, I think Lily would do fine with HP. The first few aren't very scary at all, so she should be okay. I started on The Hobbit at Lily's age, so I think Harry Potter is going to be just fine for her. There are some scary parts in the series, but the first few are less scary, imo.
I just started Two Rivers by T. Greenwood. It's another of the books I got at the convention in October. The publishing rep said this is the best book he's read in a very long time. I'm not too far into it yet, but it's great so far. Here's a little synopsis from amazon:
In this evocative novel of redemption, Greenwood (Undressing the Moon) finds humanity and redemption in the life of a smalltown widower and his legacy of guilt. In 1980, 12 years after his involvement in the murder of a black man, railroad worker Harper Montgomery is still living under a cloud of guilt. Alternating between past and present, Harper's narrative reveals bit by bit the circumstances of the crime, as well as the long-devoted lover Harper was, and the caring father he's become. Harper's narrative makes a mystery of much: we know he participated in the murder, but not why. We know his wife died, but not how. Already struggling to raise his daughter, Shelly, further questions surround his decision to take in pregnant teen Maggie. As the past catches up the present, however, Harper's grave fears give way to unexpected and poignant developments.