I agree about the traditional books, I've love it if Penelope Farmer, Charlotte Sometimes, or When Marnie Was There or an easier Penelope Lively (Whispering Knights, Thomas Kempe etc) was read aloud to the children. I imagine most would think this was beyond most Y3 or Y4 children, I would disagree.
I'd love it if the teacher stopped after a chapter and talked about some of the most interesting words, themes etc and it would be great if teachers had the freedom to pick a book that they were particularly passionate about themselves.
This is exactly what should happen in guided reading. I have a wide selection of good quality fiction and non-fiction for guided reading, I choose them all myself. Usually about 6 children of similar reading ability read the same book - but at their own pace, within reason. The children might be asked to read to a certain place by the next lesson and I would ask them to read a part aloud. The section of the book is discussed in some detail, which might be followed up with written comprehension questions. We also collect words and phrases to use in writing from our reading.
I have never heard of just aiming a group for 3b and I think I would find that really difficult. It is quite possible for 'weaker readers' to cover a lot of level 4 and beyond discussion work and work on their decoding skills through the use of carefully selected books / intervention stategies. Also, I find that there are several 'good' readers at KS1, who have poor comprehension skills (especially those that have competitively rushed through a reading scheme). It's a bit like me reading a legal document - I can read all the words accurately, but I probably wouldn't have the faintest idea what it meant!