It sounds like you are doing everything right! My DS7 wasn't really reading willingly at all before kindergarten. The year before kindergarten we read with him a bunch of longer stories. The ones I can think of right now are a bunch of magic tree house books, the narnia series, A number of Roald Dahl books, and The Hobbit!

Anyway - my DS wouldn't even call himself a reader until he could read a chapter book OF HIS CHOOSING (it had to be a good story!) on his own. Unlike my DD3.5 who will happily make something up if she can't read it and runs around saying she can read all the time. crazy