"Loosely adapted" is right. The only thing the novel has in common with the film is the bit when the giant eats scrap metal. But the film is absolutely superb in its own right. In fact, it is my all-time favourite animated film. More here, if you're interested. :)

My Favourite Animated Film: The Iron Giant | Fanfare

Regarding the subject matter, this has always been bold. It’s a rare Hollywood children’s film that doesn’t invite them to cheer at violence. I love that about it, and I also love that my wife and I saw this during the original run (in an empty cinema). Years later, we took our two children to the “Signature Edition” rerelease. :)