In dispersive readout schemes, qubit-induced nonlinearity typically limits the measurement fidelity by reducing the signal-to-noise ratio (SNR) when the measurement power is increased. Contrary to seeing the nonlinearity as a problem, here we propose to use it to our advantage in a regime where it can increase the SNR. We show analytically that such a regime exists if the qubit has a many-level structure. We also show how this physics can account for the high-fidelity avalanchelike measurement recently reported by Reed et al. [arXiv:1004.4323v1].