Is this a prequell to Return of the Jedi?

Yes it is.

The dragon does the nasty with a human... and Ewoks are born.

(It's a horror story... a furry version of "Rosemary's Baby" set in the Star Wars universe... which I suspect is already a fanfic somewhere.) XD

It looks like they're on the planet Endor because they're in a redwood forest. However, Return of the Jedi was filmed near Jedediah Smith Redwoods State Park in Northern California and Pete's Dragon was filmed in New Zealand. New Zealand is awesome, but imo if they wanted a forest with massively tall trees they should have stayed in the U.S. and filmed in Northern California, Oregon or Washington.

Now that you mention it, the woods did look like Endor.

Judas Priest, Iron Maiden, and Metallica watch My Little Pony: Friendship Is Magic