OP, you're doing just fine. To develop a love of reading and writing - step back and observe your child. His passions, his personality, his quirks. What he loves, what he fears, what excites him, what he shuns away from.
Rather than offering more advanced bks, just the fact your child likes to read and is not resistant to sitting still with a book is already a wonderful positive sign. (ask the mothers with active children who do not want to sit beyond two lines. or would rather be wandering, climbing, dancing or kicking balls).
Take note of your child's passions. Be it planes, soccer, fairies, even Barbie (who I dislike with a passion). Go to the libraries - see what resources you can find on that current passion(s).
Be it easy level, more advanced level whatever ... borrow them. Surround your child with books on topics he will definitely enjoy. Don't make it any pressurizing, mandatory thing.
Don't force him/her to read onto a difficult challenging book either, even if you think he's fully capable of it. Better to have a child feel good sbout his abiility to master, than feel a sense of failure.
Even if it's the easy one begin read over and over, it's his/her comfort level. See it as a good thing. He will make the natural progressions as his own motivated curious learner once he's comfortable to go onto finding out more. He has to be comfortable that he's at home reading a familiar book before he pushes himself to a page with more words.
Make libraries, bookstores a part of your life. My firstborn was more self-motivated in his reading progression. Harry Potter was his own natural gravitation by 6-7 (this was after the movie). He learned his first Science himself from the Magic School Bus (easy-reader books and media). Because he enjoyed the team and wacko approach so much, his first chapter books was a progression to The Magic School Bus chapter books which he sourced himself from the bookstore shelves. Next was the Magic Tree House.
I didn't have to do that much beyond libraries, gathering books and media sources on his passions etc. He was curious and cruising along himself - his preferred choices at 5-6 were boring factual non-fiction.The Eye Witness series was a favorite. The easier Horrible Histories was another favorite.
My second was entirely different. Like yours (she could recognise and read simple words, could read a simple 3 line per page bk independently by 3-4), yet refused to budge further to anything more challenging. For an entire yr. Give her a harder book that was too wordy with few pictures ... and she'd threw it across the room.
Non-fiction like her brother at 5? You'd got to be kidding. This child at 5 loved marshmallows, Barbie, Polly Poc-kets and Disney Princesses (gleaned from playschool mates) at that time. And climbing treehouses and monkey-bars.
While Barbie would never be my choice of any intellectual reading matter ... I encouraged any glimmersof reading hope by coaxing progression to chapter books with whatever means works. I surrounded her with books related to Barbie, Disney Princesses, Ponies whatever. These were the very easy readers. One entire page (maybe 10 lines?) at first would earn her 2 marshmallows. She loved the deal! One chapter book meant 20 small marshmallows.
It's not that best, but this positive reinforcement method worked for her (and for me in despair of her ever reading beyond 3 lines). I also closed my eyes to a momentary transitional Barbie-Princesses obsession and need to collect.
Once the connection was made about how wonderful it was to finish a Chapter book and to enter into another world of stories (an entire story!) she was on a rampage to find more books herself. NO need for marshmallows.
It then became Rainbow Fairies series next and before you know it ... she outgrew the airy-fairy stuff for Enid Blyton's Malory Towers, St Claire's, Warriors - Series 1 (until the series became really commercial and she hated it) series and then Toto Chan, Kira Kira, Weedflower etc etc. This all happened within a year - 1.5 yrs.
Don't worry if your child isn't reading Harry Potter or its calibre by 6-7.
My firstborn accidentally went there because he really liked the movie and related to it (the outsider syndrome). He wanted to read the actual book after that, and then the entire series. Mind you, he's also fussy about not reading the book based on the movie, but the actual book.
A "gifted reader" is one who can read a few yrs ahead, comprehend everything and be able to write about what they're reading (comprehension and composition) if neccesary. Both mine were tested gifted learners (and natural spellers without studying any lists) by their respective schools. But really, I couldn't care less if they were or not. I do care if they didn't enjoy reading.
My second didn't read Harry Potter until much later ... maybe 9? But this early Barbie reader still an avid reader like her brother with varied, in-depth intelligent reading choices I don't have to worry about reading choices these days. She discusses and debates with her brother on common books they've read.
Yes she eventually was also tested to be in the gifted range, (though you could never see that when compared to her brother, or other children her age back then). She's also naturally very lazy too.

But that's just her own natural progression once I did that first jump-start with marshmallows. Once the child discovers the magic and power of another world awaiting in those many many words after her first forays into substantial books ... she's well on her way.
Don't worry or obsess too much about it. Let your child pace and discover himself the peaceful but rewarding enjoyment of words and reading. Just support quietly ... encourage passions ... and it will come.
Also, don't get hung up on what other diligent mothers are doing - I knew a mother who had her 4 yr old child's activites planned for every hr of the day, reading taking up half that chart.
Each child is different. As illustrated above, both mine were very different. My first is a natural introvert, my second is a natural sociable extrovert.
I am just happy both mine discovered the joy of reading, of opening up new worlds for themselves - NOT every child can do that. A reader cannot be really lonely. All I did was be observant to their individual personalities, and surround them with interesting books dear to their personal interests in the early stages.
If my kids needed to supplement any passion or topic with media (eg DVDs-CD roms on Magic School Bus) .. I sourced and made sure this was available. Similarly schedule trips everywhere to places, stores, displays,museums related to those passions. It just makes them more interested to read more about it. As you are already doing ... I also read to them diligently every naptime and bedtime since they were babies - 5. The rest,
was really up to them.