I'm wondering why you want a reading level for your 3 year old?
Our library and Scholastic web sites have age related reading levels on books. Sometimes the levels seem not very accurate.
There is a five finger rule for reading at the appropriate level. If a child has five words they can't read on a book page the book is to hard.
My suggestions would be to just have fun reading together. My DYS son started reading around 4. We were reading Nate the Great to him at the time, which was to hard for him, but he would just pick a few sentenses to try and we helped with the words. He was always a run before you could walk type of kid. To me it didn't make sense to start learing to read from chapter books but he insisted. We just followed his lead.
My kids enjoyed hooked on phonics books from the library. They are very small and gradually build. It felt good for them to finish a stack of 30 books and go to the next level. We never did the support materials. I think they had that covered at school.
Some books that come to mind are Biscuit. These are stories that my daughter loved. Before she could read, she would have me point to the animal sound words and she would say "woof or meow". We have wonderful reading memories.
Dr. Suess and Bonton have good rhymes for early readers. A little deeper (and preread for a sensitive child)is Shel Silverstein poems. Some of my favorite illustrators are Allyson Jay and Brian Karas and I just love their stories. That should keep you busy for a while. Oh, just two more, read Frog and Toad books and also Mr. and Mrs. Green both funny.
Send me a PM if you have any touble finding anything listed. I would love to hear DC's reaction to these.