phey, I think that most systems which categorize actual literature selection into AR levels, lexile scores, etc.
are somewhat arbitrary, for the reasons that MK and CCN have illustrated.
It doesn't hurt to estimate reading level on the basis of some combination of those, I think-- but really, the only thing that matters much is where the child is at and what s/he is ready for and interested in. BECAUSE those systems are so arbitrary, I mean, they aren't really very useful.
Of course, if it's bragging rights that are on the line, then by all means... but just be aware that MOST of those are about pretty bare bones literacy, and not "understanding" beyond basic comprehension. This would be the "what" not "why" of your earlier remark re: the Narnia books.
I can't speak for others, but I have never "counted" books that my DD could technically
read-- but not "understand." There hasn't been much of that, though... because she isn't that interested in what she can't understand, and she doesn't like be read to since she learned to read for herself. So when I say that she was obsessed by Tolkien, Mrs. Piggle-Wiggle, the Series of Unfortunate Events, Dahl, and Harry Potter at 4-8 yo, yes, I mean fully independent reading.
I have found it more helpful to keep in mind a handful of recent "favorites" read rather than trying to determine "reading level" on the basis of evaluating the CHILD. I just take a sampling of what she's been into and see where that falls in terms of lexiles. At some point it becomes problematic because
interest level guides reading selections far more dramatically than reading LEVEL does. This became true for my DD when she was about 7yo. The thing that gives this away is that the child may well veer toward books with earlier publication dates (in which literacy levels are far higher for far younger audiences-- re: Wizard of Oz, Mary Poppins,etc.) because they are not outstripping maturity with content that isn't appropriate.
It remains true; she's been tackling adult fiction since she was about 8-9yo, but I vet most of it for content appropriateness. Yeah, okay... so the Mary McGarry Morris binge last summer was an aberration there.

Whoopsie.
There are a few sites with quizzes that will allow parents to register as homeschoolers-- you might try that with the BookIt program (which is organized by AR level, I think).
Scholastic's Reading Counts program
was once free, but isn't now.
http://www.scholastic.com/teachers/They do have other good resources though, and links out to both AR and Lexile which explain the philosophy behind each one (which might answer some of your questions about the data/organization).