I have a student similar to this as well. Next week I'm going to start her on a piece in which the left hand moves down by octaves hitting four Gs, then four Cs, then four.......
What I am planning to do is have her work out with me what those notes are first, and play them for me. Once she figures that out, I'll point out to her that it really is just the four Gs on a row, and show her like this........ That way she's being stretched to work and identify what the notes are and show me on the keyboard what they are, and then if needed, I will demonstrate for her what she just showed me, but at tempo. It combines a bit of by note, with by rote. Teaching her to work on her sightreading, but also ending with the satisfaction of having it down even if I need to show her a bit.
Sometimes a student will ask me to play it for them first. If I know they are just going to watch my hands a mirror it, I will usually say, "Let's play it together instead." Then I play up an octave, but I watch them to make sure they aren't looking at my hands but at the music. If they're watching me to lead with my hand first, I'll just wait for them to lead instead.
One other thing. Maybe try to stear clear of pieces she "knows." If she knows it, she doesn't have to count and can figure it out by ear. Let her "discover" a new piece instead, and use the more famous pieces as supplementary material. It sounds like you've got a nice balance going, though. Perhaps just make sure that the piece she does have to sight read on her own is not one she already knows by ear, or will know if you play if for her. Let it be a puzzle. A game, for HER to unscramble.
One other though, again

. I don't know how everyone else teaches, but personally I have my students sightreading two levels below their own. For example, I do not expect a grade three to sit down and sightread their piece that I've just given them. I expect them to work it out slowly, and piece it together over time. But if I were to put a grade one piece in front of a grade three, I would want them to be able to sightread that, but not at speed. Just at a steady pace, however slow, as long as they keep the beat. I guess I'm wondering at your definition of "sightreading." If she's just in the primer, I'd want her to be able to sightread one line/hand at a time provided there weren't any jumps. At that level, sightreading steps and skips, one hand at a time is what I'd personally expect. Also, I wouldn't demonstrate their pieces for them at that level. The only reason I usually demonstrate a whole piece at that level is if I think they would be encouraged to practice if they heard what they will sound like when they're done. Once they move into more advanced pieces then I would play them or if I didn't know them, send a tape home so they can pick their pieces out of ones I've selected for them.
That's alot of info, so take what you like and dismiss the rest! It doesn't all relate exactly to what you've asked about, but it bunny trails around a bit.
