I'm a reading specialist, so my response may come across as being biased. I also have a 3rd grade daughter. I apologize in advance if it seems I'm comparing our kids.
Personally, I hate giving prizes for reading. It's just one more thing that I have to keep track of and pay for out of my own pocket. I also think that just the enjoyment of reading should be the prize. I teach in a building where no prizes are given for reading. (Well, except for the bingo card our librarian gave to kids for I Love To Read Month.) Pretty much every teacher expects students to read for 30 minutes at home every night. Some track that with a reading log, some with a calendar, and some with a bingo type card. But, on the other side of the coin, my kids go to a school that expects kids to read for 30 minutes every night. They also read 30 minutes at school every day. Every 15 minutes is considered a "step" so they are expected to read two steps or more every night (and two steps at school). Whenever they complete 100 steps (25 hours of reading) they are recognized with something (one year a medal, one year a silicone bracelet, this year a dog tag). At 1,000 steps (250 hours of reading), they get a t-shirt. It is pretty cool to have that visible record of all the reading that they did. The big message behind it all is that the more you read, the better reader you will be. And the better reader you are, the better you will do in school.
The rule of thumb we use (across our district) is that it should take one, but no more than two weeks, to read a chapter book. If it is taking a student longer than that, we start looking at if the book is at an appropriate reading level for that student. And we teach our students how to tell what is a good level and what they need to be able to do at that level to be prepared for the next level. Our mantra is that reading should be fast, fun, and easy. Not that there is anything wrong with kids challenging themselves, but we don't want them to labor over the reading. That's when the fun and enjoyment goes away. We do the heavy reading work with the students during small group and 1-1 instruction when we are there to support them.
Here's the reasoning behind all the different kinds of books that are on the bingo card. Across the nation, most students do not have great vocabulary. The best way to build that vocabulary is to read a lot of books and to read lots of different types of books. My daughter is in 3rd grade and she is expected to read from eight different genres (realistic fiction, fantasy, science fiction, historical fiction, informational/nonfiction, poetry, biography, mystery). Different grade levels have different genre expectations. Reading fantasy or science fiction is going to introduce a whole different kind of vocabulary than informational or historical fiction. My guess is that the teacher wants the students to be well rounded readers with a wide range of genres.
A book does not need to be long to be challenging. It's great that your daughter wants to read the longer books, but there are some picture books and shorter chapter books that are just as challenging. Just as an example, the picture book Animalia by Graeme Base has a vocabulary level similar to the first Harry Potter book and the first 39 clues book. Many of the Who Was...biography series are just as challenging and a lot shorter than Harry Potter. The leveling system that we use would put all of those books at a 6th grade reading level.
As far as finding time to read, you just have to make time. People comment to me that they don't know how I find the time to read as much as I do. A lot of my reading is done in short little bursts--15 minutes while I'm waiting for my kids to get out of school, 15 minutes while I'm waiting for them to get their teeth brushed before bed. My kids usually are doing their 30 minutes of reading before bed. That's how they wind down at the end of the day. Like others have mentioned, she can read in the car on the way to her activities, while you are getting dinner ready, right before bed. If she is really enjoying the book, she will want to read it.
I think it would be OK to contact the teacher and explain that because your daughter is reading longer books that she is having a tougher time getting four books read in a month. I think you could ask her if she could maybe count number of pages or number of minutes for a box. I would send an email. I don't think this is a big enough issue to request a face-to-face meeting. But, honestly, if she is having a difficult time reading four books in a month I would be concerned that the books may be too difficult. My 3rd grade daughter reads probably 5-6 chapter books a month. One of her most recent was about a 200 page book that is at a 6th grade reading level.
As a teacher, I can say that if you approach the teacher with an, "I noticed..., do you have any suggestions" attitude, the teacher will be more likely to work with you then if you approach her with a, "This isn't working for my kid" attitude.