These children all sound so alike, I think there's a race of Dr Who type aliens who are infiltrating normal families with DC's who obsess over imaginary characters. 
Tigerfeet my DS is like your daughter academically, he's just turned 8 in the summer and it's only in the last six months that his reading has picked up, that was with one to one help at school in lunchtimes twice a week, me paying for a tutor for an hour a week, and then us doing 20 mins of reading every day. We do live abroad so he was learning to read in a foreign language but his English reading has also come on (as I said with the aid of Pokemon books) and he's probably reading at his age group in English now; but for the first two years, he just couldn't grasp it at all.
However, his handwriting is shockingly bad, because he can't be bothered, letters aren't really the wrong way round anymore but numbers are - 24 becomes 42 etc and then the numbers themselves all face the wrong way. He is however dyspraxic and I've just had him tested for dyslexia, although I'm now starting to think perhaps he's not as it all seems to be coming together.
He's a daydreamer and by the end of last year the teacher was closing the curtains next to his window to stop him looking out.
He has been given an assistant for two days a week and hopefully she'll keep him on the right track.
Club Penguin is also very popular here too and he got a puffle for his birthday that goes everywhere with him (in his Pokemon backpack). I believe it's a circus on Friday or something like that, that you absolutely must, must have membership for (it's not going to happen). I do limit Club Penguin to weekends though, so maybe the obsession isn't quite so strong.
But like other DC's he's very melodramatic, last night was the worst day ever, because I'd told him off for not coming and brushing his teeth when I'd asked him to, big dramas.
It is nice to know that there are other DC's out there who sound like mirror images of my DS, even down to some of the things they say. I sometimes feel very isolated when I'm confronted by teachers telling me all his faults, it's nice to know that he's not the only child like this.