You are right to use below-level books to work on fluency with them. I learned a new activity in my last class that I want to try, and the experts have had a lot of success with it. First, though, the students have to have explicit instruction that reading should sound just like talking. They should have good, fluent reading modeled for them often.
It's called the Four-Color Pen strategy. Kids love to use those pens, so that's part of the motivation. This was used on 4th graders in my lecture, but I'm pretty sure 3rd or 2nd graders could do it too. The child needs a four-color pen, a script to read from that he will mark on, and a tape recorder. The student records himself reading a passage. Then he plays it back and marks any words that he didn't say correctly. Second time, he records himself reading again, and listens again, marking words with the second color of pen. Third time, again, and fourth time, using a different color each time. Students want to "beat" their old "score" and will strive to get more words right. The repeated reading helps with fluency and phrasing and inflection. The students who have done this also love to use markers to make a bar graph of how many errors in the first color, second, third and fourth, and see their progress.
I'm planning to find some time this spring to use it alternately with some kids in my groups. I have them do reading individually anyway, so it wouldn't make any difference to the group if two of them are off in the corners with my two tape recorders doing this. It sounds like something that will be well-accepted and help some.