Okay, I'm going to blame lack of sleep for this one. I was thinking, "Niniel was blonde. The elf girl was the one w/dark hair." Due to the excuse listed above, I mixed up the name Finduilas with Nienor. Wow. Fail on so many levels.
If I remember correctly, it takes place "in the land beyond the Gray Havens" during the First Age, as opposed to LOTR's Third Age timeline. I've been told Children of Hurin is also touched upon in The Silmarillion, though I don't know by how much since I haven't read that one yet.
In short, yes, Children of Hurin is part of the LOTR universe, just in a different location and much earlier timeframe.
The use of perspective and atmospheric perspective (the mist) gives this a level of realism that sends a chill up my spine. As if I'd been on a walk in the woods on a misty morning and just happened to stumble by this.
Severely creeped out, in the best possible (OMG! It's a dragon!) way.