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Does anyone have any quality research on ability grouping? I want our principal to ability group our students for middle school Reading.

Several years ago I did a literature review on the subject.  I did not do a specific study of grouping for reading ... it was a general project because I had the same interests that you have.  However, I was skeptical that ability grouping was/is worth it.  I know that, as a teacher it is much easier to instruct students when they are in homogenous groupings.  But there is evidence that more students do better when they are in heterogeneous groups.

If you would like me to send you the literature review, just send me a note and I'll send it along.  If nothing else, you could check the sources (remember, they're all about 17 years old) and see where they lead you.

"One Child at a Time", not sure of the author, but it is a great book with lots of research based ideas for reading. 

Ralph Fletcher is another author who has done research, mostly with writing, but also with reading.

Fountas and Pinell have tons of books, mostly regarding Guided Reading.  They are more geared toward elementary, but can be altered.

The main problem with ability grouping is that it needs to be fluid and constantly changing as students are not going to be the same ability level for every skill or strategy that is taught.  That is where small groups come in.  Group them by level and teach, group by skills and teach, group by ability to use certain strategies and teach.  Always changing.