It's so hard when you feel like you have the opportunity for something that is prized by others and you are turning it down. But a prize isn't much good if it isn't something you can use.
I wonder if the small school would be happy to let your DD spend some time in one of their classes with the teacher. You could see how she feels comfort wise, how you feel and maybe they could get a handle on your DD and give you some idea of how to accommodate her? They might be able to decide before the new school year which class/year would be the best fit.
Something to keep in mind, highly gifted children often start out ahead of their peers in academic skills, but whether they do or don't, they will usually move through the material faster. That is where real flexibility is needed, not just picking the right starting point but staying on top of accelerated needs and being willing to keep moving with the child.
