A few things to consider:
The teacher is not qualified to question your child's diagnosis.
A child does not have to perform below grade level to qualify for protection under either IDEA or Section 504.
Your child's performance is consistent with her diagnosis and demonstrates the need to continue her accommodations, as evidenced by the following:
She is choosing reading material (The Hobbit) that is at the appropriate level for a child of her intellectual abilities, as measured by her IQ testing, and yet she is progressing through the book at a very slow pace, consistent with her dyslexia and supporting the need to continue extended time accommodations for reading.
The teacher admits that writing performance is inconsistent, and that your child is sometimes unable to perform at grade level in this area even with accommodations in place. Your child did require more time than would otherwise have been allotted for the standardized assessment. The fact that the teacher doesn't feel that it was a lot of extra time doesn't change the fact that your child could not finish in the allotted time - she is demonstrating a need for her accommodations both in class and on standardized tests.
It is worth pointing out that if her classroom performance shows that your DD is not able to perform at grade-level in writing on a consistent basis even with extended time, her disability is directly affecting her educational performance, and that means that she should qualify as a student with a disability under IDEA, not only the ADA and Section 504, and in that case she should be eligible for an IEP, not just a 504 plan.
Good luck with the meeting. I agree that it might be worth it to hire an advocate to go with you.
