Guided reading is where a group of children share a book, talk about it, write about it and, for want of a better word, analyze it. The book is chosen to suit the abilities, interests and attention span of the group.
I would be concerned about there being "v few suitable books" at your ds's level. Do you know why not? Is is possible that your ds has cast an eye over the available books and decided that "they are all boring" without looking properly? If not, I would be talking to the teacher about this.
My ds1 is in year one and the class is split into 5 mixed ability groups that they work in for all subjects except literacy where they are grouped according to current ability. Could it be that your sons school do the same?
Guided reading is about much more than just decoding the words - if done properly it shouldn't matter that he finds the actual reading easy. They should be discussing the characters, what's going to happen next etc He should be sent home with harder books though. I would be concerned that they leave it purely up to the children regarding what they bring home. DD was finding her guided reading easy last year, but she brought home books which were 2 levels harder than the guided reading level....
Maybe he needs to have access to another year groups books to choose his book to take home. On the other hand, if he's that sort of level, then I presume he can actually read pretty much anything, so why not just let him read books which interest him?