Thank you very much for the insights!

@Coll: Yes, I think I overestimated the maturity of 1st and 2nd graders, but since DD is still 5 years old and in a lot of ways act her age, we are not accelerating her yet. We may have to look at acceleration in the future, but since she is actually learning something in school and the Kumon enrichment is sufficient challenge for her now, we are not ready to jump through all the hoops to have the acceleration, which I know may involve finding a new school for her.

@La Texican: I guess my concern is really regarding asynchronous development and how to handle it, specifically, what parents do if their children are advanced more than 3 levels in certain areas, but are not quite as advanced or average in other areas. Thanks to the answers and articles posted here, I have a better idea on what to do in the future. It seems one needs to constantly adapt to future situations, as opposed to having it planned smoothly. One never knows what surprises these children have in the future.
Regarding having a math tutor, I have an engineering degree and am capable to be her tutor in algebra, calculus, etc. I had lots of practice from high school to graduate school in assisting my classmates in math. The topics I really do not have the patience or the experience to teach are basic addition, subtraction and multiplication. Thankfully, the Kumon instructor is more experienced in that field and DW managed to guide DD at home until I took over for the more advanced material.

@Giftodd: Very good points. I know that the weak point of Kumon Math is word problems. However, it is working for us, as DD is building a strong foundation in numerical equations now. Word problems will be one of the things that I will have to enrich her curriculum with in the future. The asynchronous development meant that such simple word problems asking how much is 10 dozen will lead me to a very long explanation of what is a "dozen" and almost give away the answer to her. As she learns to read more and have a larger vocabulary, we do need to give her more word problems in the near future. After pondering what Coll said though, we need to also not overestimate expectations in certain grade levels. Even if the child cannot understand fully the Harry Potter book, the fact that they can read it correctly means they're already "advanced" compared to their peers. Comprehension starts a bit later, and I think Harry Potter, especially the later ones, are certainly many reading levels beyond first grade. You are right that DD is lacking in comprehension at times, but sometimes I know the problem is not just reading. She asks "why" all the time, and with child-like innocence, when she recently watched an animated feature film, she asked why does the bad guy hurt so many people to rule the world? I am at a loss of how to explain certain things, but grown-ups don't ask that kind of question.