I would present it in a positive light to your daughter, and ask if she'd like to be moved to a class where she can get more interesting work. She can do all the extracurriculu/nonacademic activities you listed as well as being in a gifted class, and I'd trust the teacher on her recommendation for a more appropriately challenging environcment unless you have a specific reason not to.

Striving to increase my rate of flow, and fight forum gloopiness. sick