I don't know whether to go back to school and insist that if one of the classes is going to have 17 kids then it can be any one of those classes not just the late start one and they must move her NOW. Or whether they are right and all this extra preschool is a wonderful thing.
Yes dear, go back in and insist. Get your psychologist to call and advocate for you. Do it today.
The selective mutism is very hard to know about which is better. You will have to be flexible and see how things go. Again, I would call the psychologist and ask for her/his perspective.
It isn't your fault for believing the school folks - it is there job and we are all trained to defer to their authority. It takes being burned a few times before we are willing to give up the default assumption that the school folks know best.
Love and more Love
Grinity