How does she react when she's working on material that challenges her and is not intuitively obvious? Does she shut down or keep at it, working through her frustration?
Does the teacher have chapter books she can choose from? DD7 refused to take in chapter books from home, but was happy to choose them when offered by the teacher.
I think it's important to have her appropriately challenged at school and would stay on top of it. Instead of letting her choose whether to read in school at the appropriate level or not, I'd give her the choice of how she was going to read at the appropriate level at school (go with the +2 grade for reading, chapter books from the teacher, chapter books from home).
