Hi M.,
The video "Goodnight Moon" contains sleepy time stories and music along with real children telling about their bedtime routines. One little boy says that there's no such thing as monsters.
I'd go with a nightlight. I wonder if flashlights could start a fire. LED flashlights are the hottest. Tungsten ones can get pretty warm. Put either one under blankets and the heat could build up. I imagine that shake (Faraday) flashlights may be the coolest.
I told my children that thinking there are monsters is our brains' way of protecting us. When people used to live out in the wild, there really were "monsters," otherwise known as lions and tigers and bears (Oh my!), etc. So it's part of our survival instinct. The two of you could take a flashlight and peer into all the dark corners and under the bed to search for anything that shouldn't be there. Make sure the doors to the house are locked - it keeps out the human monsters, I wouldn't tell her that though. (Or skip this step if you think she'll obsess about checking the locks. That might start another fear.) And then declare the house safe for a sweet night's sleep.
Before going to bed your daughter could say a thank you to her brain for keeping her safe and tell her brain that all is well.
Zzzzzzzzzz,
: ) Maureen