And I have seen Water Horse. It's basically Pan's Labyrinth without the violence--i.e., child dealing with magical realism in a war setting, "war is bad," etc. The baby monster is pretty cute though.
I saw that at a Kid's World in Hirakata (Osaka)! The sticker's covering up the name in the picture. The full name is ”ハロー外人さん,” if I remember correctly.