My daughter (now 12) used to do this -- Please, do it with her; the time will pass very soon when she wants to do this "acting" with you and you'll miss it more than you know! It does a couple of things for kids this age: It is just plain imaginative fun (and does not involve a TV or computer screen!); it gives them a sense of control; it actually is (to me) a kind of pre-writing skill--they are learning dialogue and plot, and that stories go in a certain order; and by playing it with an adult who will play along, rather than a peer who is going to do his or her own thing, they get to be the boss. And it really is OK -- in fact, healthy -- for her to be the boss for a time. A kid this age controls next to nothing in her life, so this is a very harmless and beneficial way to let her boss you for a time. Of course, you need to set limits if it's constant and you must do a chore, and she needs to learn that if she can wait and occupy herself, she will be OK. But I'd never let the chores come first -- this is going to end soon, so enjoy it, even the scolding when you don't say your lines right. Just ensure that she learns to be kind when telliing someone, "Sorry, that's not the right line!"
She'll learn to improvise (and let others improvise) soon.