Debating the value of the controlled word list vs “real reading” for fluency provides every generation with opportunity to develop their debating skills. Both activities are valid and serve purposes. Their effective balanced use relative to each other is an art.
One reasonable parallel is the development of specific skills for certain games, such as softball. Time spent with intensive “drilling” of pitch and catch, hitting the ball, pitching, and base-running is well spent. The wise coach will balance these drill periods with game practice periods.
Decoding individual words serves a purpose, just as speed drills do in arithmetic. The reading program includes both reading the words from the print and “reading” (with expression, comprehension, and interpretation) the words of the story. Both are needed.
Regarding the length of the stories read…It’s the quality of the piece rather than whether it is book length or “short” that really counts. It’s too bad that some anthologies anthologize mediocre stories. Sometimes the shortness of a story actually helps it be memorable, effective, formative. Such are some of the fables that come to us from centuries ago.
While reading/re-reading familiar and well-written pieces of literature helps the child develop fluency of expressive reading (an important skill), it has limited value in helping him develop decoding skills. Some verbal calisthenics are needed.