Talk to his teacher. I was a teacher in 2nd 3rd and 5th grade and did AR tests in all of the schools where I taught. I agree with you that likely, there are 10 questions, MAYBE 20 tops. With AR, once they take a test, it's part of their score and the computer won't let them retest .... technically. The teacher DOES have the ability to go in and delete the exam. She may or may not know it or know how to do it. It may be that she doesn't want him to fail miserably at the exam and have it affect his grade/scores. I was so sad to see a kid spend a week reading a book b/c it was worth 3 points, (They had to earn two points each week), then they take the test and fail it and earn zero points. Basically, all that time wasted.
Also, she can, if she were willing to, preview the test. As a teacher in the AR program, you can take the test yourself and get a score. It doesn't save of course, but it lets you see all the questions. When I taught 5th grade, the whole class read Because of Winn Dixie. We discussed the book and before they were allowed to take the AR test, I previewed the test to make sure we'd done a good job discussing it. I didn't give them the questions, but just reviewed it myself. Your son's teacher could do this for his first couple of chapter books before she decides to give him such strict rules.
She can also create her own tests in AR. We did this a lot in 5th grade. I had a lot of science books the kids were reading. They wanted to earn AR points for them, so we made them into tests. I had the kids help write questions and 4 answer choices. Great learning experience.
Sorry. I got off track there. Anyway - pm me if you have any questions. Your son's teacher needs to realize that your son is not the norm as far as reading the book 3 times. She needs to let him take a couple tests of his chapter books and see how he does. If he fails them, then he should have to read them 2 times or go to a lower-level book. If he passes them, then she needs to just let him earn his points his way and contact you if there's something wrong or if he starts failing the tests.
When you meet with her, ask her if his scores on AR tests become part of his reading grade.