Like your son when my dd was five she was able to read at a higher level than the books she preferred to read. I came to the conclusion that part of the reason was visual. The lower level books have more interesting pictures in them and even very gifted five year olds like pictures. I found some wonderful books at a higher reading level with beautiful pictures in them which were a nice bridge into normal chapter books. A great series of visually stimulating chapter books is the Geronimo Stilton series. The author uses fun, colorful fonts and lots of pictures. The series is popular with boys and girls.
DS5 is the same way. He reads higher level books here and there, but he wants lots of pictures, he prefers bigger font, ... I learn to let it go and let him read whatever he wants to. Right now he is in his room reading Geronimo Stilton book and having great time. Yes, he could read more difficult books, but he is having fun and that's important as well.
