I don't know what a "1.4" reading level is...or what scale that belongs to...but my child is the same age as yours, and she's reading the Magic Tree House series. She's the only child I know that age (we homeschool) so I don't know how that compares to other children, etc.
What is expected at this stage in her phonics/language arts curriculum is to have about 200 sight words memorized (and they've moved from easier ones like the, want, see, look to mother, father, anything, could, would, should) and to be able to phonetically sound out most words. We are working on various spelling rules (long vowels with an e at the end, two vowels together, etc) and we've also recently started contractions.
For grammar, we are working on subject/predicate, past/present tense, proper nouns, etc...
(I should say that she's in her second semester of first grade curriculum.)
Hope that helps!
I think it's so great that he wants to read...it seems to be becoming a more rare way to entertain oneself, and I really like to see children reading. Yay! Good for you, mom, for taking an interest in it and nourishing it.