Do you find the teacher's logic on this questionable?

I think both logics are logical, you need to find the right balance. If it's too easy she knows they're easy because she's not good enough for more difficult work and it damages her confidence. But if she gets books that are too complicated for her, she'll get discourage that she can't manage it. Why don't you give your daughter more complicated books to read, as a hobby? That way she doesn't get marked on these books, so she doesn't get the feeling she's being "punished" every time she does it wrong and it might become something fun and subtly train her.