I don't think I would say it is taking 30 minutes, and the reason is that this could be used against you later ("But you said before that it is taking her 30 minutes to read the assigned grade-level books"). I would be honest and say, "So the issue is, it takes DD about 5 minutes to read the assigned text. What should she do for the rest of the time? It sounds like you do not want her reading X book. Can we compromise on some other reading matter that will keep her engaged and interested for the full 30 minutes?" (What book did you ask about? If it is was waaay above grade, maybe it was a turnoff to the annoying teacher? Is there anything closer to grade that your DD still enjoys?)
It sounds like you have a fight on your hands. Can you ask her if this policy will change once your DD is assessed?
Are you in a "striver" district or school? I ask because it seems like either you have an awful teacher or a school where teachers are feeling very defensive about parents claiming kids are above grade level. I know it happens.
