I've only seen reviews of this book, and I get the impression it may be a bit too "mature-themed" for children, but Mythago Wood (Robert Holdstock) sounds pretty interesting in this context.

Investigating the wood in question, Ryhope Wood, as you get nearer to the centre of it you begin to encounter apparitions of figures from English folklore - initially ones like King Arthur and Robin Hood most people recognise - as you get deeper into the wood, the apparitions represent folkloric figures from earlier and earlier times until, at the very centre, you have apparitions of figures from the stories Neanderthals told each other, beings from myths told at a time when we were a different species!

I haven't read it yet, but I've been meaning to for ages.