Similar to what frannieandejsmom said, the Principal of the K where my son goes to school put it this way: learning doesn't always have to be vertical, it can be horizontal; In other words, if the class is doing counting to five and your daughter already knows that, maybe she can do word problems related to counting, or maybe she can create word problems (just an example). Her point was that perhaps there can be work given to her that is related to what the rest of the class is doing, but calls upon different (more challenging) skills. That is of course, if grade skipping is not an option for you.
Also, you mentioned that "All the tests support her decision, and she wants my daughter stay in K and enjoy K" What tests? I'm a bit confused, sounds like all the evidence points in the opposite direction.
