This is why I was glad when DD's first grade teacher this year said that once they got past a certain letter (DD was at Q end of kindy I think), the distinctions didn't matter really; all the kids in the top reading group could read anything at all you put in front of them, but they were going to discuss books together to work on reading between the lines, looking at allusions, characterization, etc etc. I was worried we'd get the old "she's just decoding" line but really they do discussions dd can actually benefit from, as far as I can tell. (Of course it's still kinda boring typical elementary school books, but it's really hard to find good materials for this age and ability. Another year or two and DD will be able to read anything at all and catch the deeper meaning consistently, and then we can advocate for meatier books).