It is possible for lots of children to learn to read using them, but for some children they just won't work and so may confuse the issue - particularly if you are trying to start a preschool child off on them. I'm not sure how you "teach" with them as they rely so much on kids just recognising the shapes of specific words. As above they don't allow for learning (or teaching) a strategy to tackle unfamiliar words and words that aren't in the books. Lots of children would be able to simply memorise a Peter and Jane book (think how many know The Gruffalo off by heart!) but given a - for example - Songbirds phonics book, would then struggle. Ergo, they won't actually be readers yet.
I was taught using Look and Say (although I was a child who began reading before starting school) and we were still encouraged to "sound out" unfamiliar words. However as we hadn't actually been taught the sounds and "rules" to do this, it was very hit and miss - saying see-ay-tee doesn't give you cat! But the inclusion of sounding out even during the Look and Say era says a lot about the phonic basis of learning to read.
A lot (probably a majority) of children will learn to read with mixed methods, but for those who can't, the use of mixed methods can be really damaging to progress. We can't know which children will struggle until they start. It makes sense, therefore, to begin with the method for which there is excellent evidence and the highest success rate and move on only if children struggle with that. And like it or not, children will be taught using phonics when they start school, so any approach other than this before they start school has the potential to confuse.
Btw, there are very few true "sight" words in the English language when you are able to apply the full alphabetic code. It is true that contextual cues will, for example, help differentiate between homonyms. The idea of "sight words" for early readers is more that these words contain phonic sounds that are not part of the early phases of phonics. Many children will have learned to recognise these words by sight by the time they would learn the corresponding phonic sounds and therefore never need to sound them out. But it doesn't mean they can't be sounded out. High frequency "tricky" words like 'the' and 'was' are almost impossible to exclude from early reading books and usually parents or teachers will have to help a child read these words initially. But they don't need books to specifically address this as it happens as part of book which are otherwise purely phonically decodable.