My dd was reading at above 4th grade level when she was 5 years old and was reading chapter books at about 3 1/2 or 4 years old.
She is now in 4th grade (skipped 3rd) with a wonderful language arts teacher. She came home last week and informed me that "this is the year I learned to read". She is looking at books in a completely different light. Appreciates good literature at a different level now. Her teacher does not limit the level they can read at and actually encourages kids to stretch themselves. The kids in that class read anywhere from grade level to high school level books.