Wow, you are describing my dd11, who we also assumed to be MG, but who turned out to be HG (or more depending on how you define it -- fits DYS IQ criterion but not way over) and 2e. I'm not suggesting that your dd is 2e, BTW, but more suggesting that a child who is performing how you describe (that's about where my dd was in K as well) can do well being the youngest.
Mine will be taking honors science and English in 7th grade next year and is subject accelerating by a year in math, so she's certainly not struggling despite not being PG with no LDs or MG or whatever it is that has her academics at an advanced but not "wow, that's amazing" level.
We intentionally snuck around a K cut she didn't make b/c she seemed ready for K. She, too, is very, very tiny and 6-18 months younger than many of her grade peers b/c she started a little early and b/c holding out kids with bds near the cut is very common here too.
As an old friend of mine used to say, "you can only raise your children once." I can't tell you how she might have gotten on with kids closer to her age. Ours has, honestly, had some difficulty with being physically smaller but, like your dd, she probably would have been one of the smallest even if she were among the oldest in grade.
I can't say that I would have done it differently, though. I think that she's where she belongs for the most part.
As to how you decide, the only advice I can give is to do what seems to be the best fit for her now and not worry as much about things that would require a crystal ball to predict. That's the approach we took when grade accelerating our other dd and it worked both the year she skipped and is still working four years later.
