I don't think the 40 piece challenge is exclusively about reading ability. It's also about the ability to quickly understand the music, break it down, find where the difficult spots are, find efficient ways to get over the main difficulties, and produce a reasonable rendition of it in a limited amount of time. It's more than just sight reading or reading the piece a few times but it's also more compact than practicing a full-fledged piece. The short turn around time alows you to close the loop on the whole process of learning a piece from scratch many times in a year and that means you get very good and very efficient at learning new pieces.
I have personally done this challenge for several years and I think it did benefit my general practice efficiency and speed of learning pieces. My reading improved too, although I did a lot of reading besides that so I can't say how much the challenge contributed to reading skills. But even if reading improvement is only a side benefit I still think it's worth it.
You can go see what pieces I learned in the 40P thread. They are not beginner pieces. Not super advanced either but certainly not something that a year or two ago I would have been able to learn in a week.
But even if those benefits were not there I would still do some form of this challenge simply because I enjoy it. I enjoy learning new pieces, not just cursorily sight reading them but properly learning them and I like to go over a lot of varied music.