The AR leveling system rewards kids with a big vocabulary, but doesn't reward the ability to understand complex / mature concepts. It's a pretty mechanical calculation based on word length / sentence length.
I personally figure that any book DD chooses to read (and actually does read) is an appropriate level. There are some lower-level books she hasn't finished because of content (boring or too mature), and some really high-level stuff she has pushed through on sheer force of will (a 7th grade book on seals she picked out in first grade, because the "over 6th grade" indicator is almost the same color as the "first grade" indicator in the school library).
Most of the books she's interested in now are 5th grade level; it's hard to find 6th-grade-and-higher books that are interesting for a nearly-8yo.
If your DD's choices are limited at school, or she perceives that they're limited, no harm in talking to the teacher now. If her choices are unlimited, or she's not bothered by the limitation, probably no point in making a deal about it so close to the end of the school year.
