I don't think you are being 'special snowflake' about this. My DS is still 7 (also Y3) and finding some of his school books pretty tough, content wise (though 'only' band 15/16). E.g. horror story style books or non-fiction and historical fiction on dark periods of history (currently 'Black Death'); but also teenage romance style stuff for which he has no appreciation whatsoever.
I do think kids should be getting fairly challenging reading material at school, at least occasionally, however it should be not just matching their ability, but also be age appropriate.
Hi-Lo and Lo-Hi books designed particularly to be interesting to older children who can't read very well yet, or to younger children who read particularly well, do exist. Also schools might provide non-banded books particularly for young, able readers; many 'classics' in children's literature are challenging, language wise, but suitable for younger children, content wise. Simply moving an able reader up the book bands is rather lazy, IMO.
Also I do think it can create problems. Children get confronted with issues they do not have any context for, leading to misunderstandings and half-knowledge, which can be worse than knowing nothing.
And we've had issues with nightmares, and not being able to go to sleep due to being scared.
Furthermore, some books are simply terribly boring (e.g. teenage romances) to a 7-yo but having to read the whole book nevertheless, is frustrating and a real chore, and has at times turned DS off from reading altogether.
Can you start a conversation with the teacher about this? Would they be happy for your DD to bring her own books in?