Most of her reading errors sound like she has problems with tracking and convergence and possibly with scotopic sensitivity. I would make getting her visual processing evaluated a high priority. It seems from her description of what she sees and your description of what she does when she tries to read that she has an input or processing problem with her visual system. It would be hard to say at this point whether her problems sounding out are related to phonological processing or to just not seeing the letters that are actually there and seeing them in the right order.
I was wondering how things were going, and it the vision testing turned up anything.
I was also curious about how she does with verbal rhyming?
If you say what rhymes with 'Bat' and she says 'Flat' - and then you ask 'what is the first sound in 'Flat'?' can she identify the FL blend? The F? If you ask her to spell things aloud, without the word in the visual field, can she?
My son had visual tracking and depth perception issues when he was before 3rd grade, and lucky for him, it was a matter of being immature, and he outgrew it. But I'll tell you, it was disconcerting to say the least that he knew all the letters and their sounds at 2, but didn't put words together at all until age 5. That was a lonnnnnnnng gap of time in his mind. He said once: "Mom, it was your fault that I didn't learn to read sooner. Every time I asked for help, you brought out a pad of paper and made big letters on the page. You
should have just asked me question so I could
hear you."
((Did I mention that perfectionism is common in gifted kids? And that it can be 'outer-directed' as well as 'inner-directed?))
Hope that helps,
Grinity