I think that if it were my daughter that I might pull out some "tough love" and stop reading the same books over and over. Give her a few choices of other alternatives that I was willing to read and to wait until she was ready to pick one. Once one was started I would continue with that book with as many breaks as she wants or needs but not pick up anything else until she chooses to go back to the book for more.
I think it would show her that yes, you believe she can handle them, that you are a caring adult with boundaries (no, I will not read the same un-pleasurable books over and over), and that good things are worth working at.
I'd keep up with the picture book reading but just save chapter books until she is ready again.
Another thing you could try is to have the whole family read the same book and to discuss it at dinner. Maybe if she hears you and your husband talking about what happens in the later chapters she will be curious to read them for herself.
So, yes, I think you're doing the right thing by asserting your boundaries!
