Aldiwhore, I completely agree about there being nothing wrong with sad stories. I'm normally the one despising Hollywood and its saccharine ways when it eschews a really fucking awesome ending that might be sad and heartbreaking, for the safe, happy-ending ending.
Many a childhood film/cartoon/book had very sad parts in it - someone mentioned the horse dying in The Never-Ending Story. Oh my god, that broke my heart at 8 years old! And yeah the wolf in the garden was scary - actually, really scary, but there were also safe bits in it - the bits where you're heart slowed down, you stopped clutching your cuffs or the pillow, and you knew amongst these characters, you could relax for a while.
But there is something about Watership Down...maybe it's the trippy bits? Maybe it's the violence? It's not a children's cartoon. It's really, really not. I vividly remember the terror in Hazel's eyes, how well that was portrayed, in this amazing but awful ultra-realism - an ingredient that was completely missing in other children's films or books that did also deal with fear and death.
It's disturbing, and not because it's also sad. I'm not saying that makes it rubbish - I have a really, really, really high opinion of it as a piece of work. But it is scary, it is disturbing, and it is completely relentless with it.