My now 4 year old knew her letters by 19 months. I bought her those LeapFrog Fridge Phonics and she played with them constantly for 2 days. That was all it took.
I loosely followed the Letter of the Week "curriculum" (suggestions, really) when she turned two. I did what I felt was comfortable for dd1. One thing we did different was to make the theme start with the letter we were focusing on. She really enjoyed the things I did with her...yes, we even did the flashcards. Just before she turned 3, she was able to read quite a few of them on her own.
I think what we did took a grand total of 15-20 minutes each day, spread out throughout the day (not including reading books, which we have always done for an hour or more each day, or "field trips" to farms, zoos, etc.).http://www.letteroftheweek.com/preschool_age_3.html
After this, dd1 was close to the age of 3 and reading quite a few words on her own. I read read read read read to her, and introduced her to starfall.
In September of last year (when she was just over 3 1/2), we began 100 EZ lessons, which started off way too easy for her but quickly became challenging. She did very well, and now she reads at a late 1st grade/early 2nd grade level. She just turned 4 late last December.
I feel my approach was mostly child-led, though there were a few times when I gently persuaded her to get through a sentence that was diificult for her. However, I do not consider her to have been "pushed." I have an early reader on my hands who read everything she can, and takes great pride in being able to do so.
My advice -- if she is showing an interest, help her along. Do not be put off by those who insist that a child shouldn't be reading until age whatever. If your child likes this, then keep offering it at a more and more challenging level. As long as your child does not feel stressed, then it is all very very good.