Does your school have access to a website called RAZ kids? If so, I would stop debating it with the teacher and allow her to read and test her comprehension on RAZ and let her go as far as she can on that website.
I tend to agree that the assigned levels are really unimportant as long as your child is reading and comprehending at her desired level. It sounds like she is already beyond classroom instruction and her teacher is very inflexible. Perhaps I have been beaten down by the system (we have no G&T here in MI, so we get NO acceleration what so ever) but when I finally stopped banging my head against the wall making the school cooperate and just started supplementing at home, my life became so much more peaceful and less stressful and my DD continues to flourish and bloom at school at her own pace, regardless of what is being instructed in the classroom. Currently we work on Algebra at home and they are just starting division in her classroom.
I am just thankful she loves the socialization at school, otherwise, I fear she would hate to go there every day. If I had more confidence, I would just home school, but I can clearly see my DD is going to be far more advanced then I ever was, so I don't want to mess her up for life!! LOL
