Speaking perhaps more as a parent than a teacher at this point, I would say that if a child uses a picture that is there to guess a word that is OK when looking at a book for pleasure, as long as nobody thinks that it is 'reading'. It isn't, it's guessing. And if a child was doing it in a 'reading lesson' envionment (reading in scool, reading a school book at home') both partries should be absolutely clear what is happening and would go back and review WHY the word said that and to give the phonic explanation,
In a similar vein, DS used to 'recite' - absolutely word perfectly - long books that he had had read to him (Little red train books or similar). Other people thought he must be reading. I knew that he was reciting from memory. I would never say 'good reading', i said things ike 'wow, yuou know that story really well, don't you'.
The aim is to read words, in order to make sense of texts. If on the way, in fun, on a few occasions, a cild 'guesses' at a complex word, as long as everyone knows that it IS a guess [and may sometimes go back and talk about how else it might have been approached, perhaps once the text is finished if in the middle of a story], it is not harmful. The only thing that would be harmful is if the 'guessing' is praised as 'well done, you have read a long word' and the child starts to apply that as a reading strategy, which is going to fail horribly at a future point - whereas phonics won't.