I am actually with your DD on this one. Siblings will be brutally honest and blunt with each other and sometimes that is a very good thing. I have twins and they will say things to each other that they would never to an acquantance or even a friend. I do not interfere because I know they are both okay with it and at times they have benefited partly because they know they can trust each other. You also specified that your DD "is socially astute enough to know that it wasn't a nice thing to say" so there isn't an issue of your DD becoming a social pariah in other settings. That's when I would interfere - if she is socially clueless and apply the same approach to strangers and friends.
As to how to soften the blow in general - I don't partly because my kids are emotionally intense and I don't want them to struggle socially, especially as they grow older. This is a parenting choice but I found early on that trying to soften the blow just didn't help and sometimes made things worse. I go for short and simple and disregard the tears in the moment, but at a later neutral time, I will discuss extreme emotional reactions and what they can expect from others as they grow. I am honest with them and time has verified to them what I have said in the past. There are still occasional tears (hence, emotionally intense) but much much more reasonable to the situations. They still don't like my criticisms but they do consider them and sometimes even conclude that I am correct.
