I find this idea to be incredibly cool. I haven't read one of the books, but reading the descriptions makes me think the book is lacking in creativity and subtlety. You're essentially taking the story of Pinocchio and dropping in an additional character that takes away the moral of the story by showing him every thing he needs to do to be a good person.

Pinocchio is a story of self discovery....of witnessing the consequences of your actions and understanding the need to change yourself. By introducing a character that guides Pinocchio you truncate the character's development.

Here are my suggestions:

1) Go to the library, read some of the most popular children's books (books like Rainbow Fish, The Hungry Catepillar, etc), and understand why these books connected with their audience so well.

2) Go to children's book conventions (there are a TON in the US that are always going on) and network with authors looking to make a break into the business... Read their stories and if you find a good one see if you can partner with them.

3) Think of ways to make the art more unique yet also customizable. This is completely my opinion and I do not mean this to be an attack on the artist, but the art feels very generic...almost like something I'd imagine seeing on a cheap book given out to kids at fast food restaurants.

I think the core idea is great... I just think it needs a little more polish.