The teacher reported that she was embarrassed to do them, and that she is aware that DD doesn't like to appear different and is trying to be cautious about allowing her. She also wants her to start showing self-advocacy and extend herself...if the teacher says "write two sentences", DD should write 3-5, and more complex than her classmates.
Two things about would concern me - not huge concerns, but things to be watching out for. We've had teachers jump quickly onto the "being cautious" about making a child appear different. We've gotten a bit of a double-dose of this from two directions - gifted and LD. The thing is, your child probably is different (heck, all kids are different). I believe it's more helpful and supportive of our kids to agree that yes, what you are doing is different, but not make a big deal out of it and support it. Some kids are going to be embarassed and not want to stand out, but with my kids, having the teacher subtly reinforce that not wanting to be different has backfired - because my kids *are* different and they can learn more about how it's ok to be different by having someone suport them in doing what is right for them than in helping them avoid it or hide... not sure I've stated that very well!
We've also had teachers stress self-advocacy from very early on - and honestly, it's never worked for any of our kids until they were developmentally ready to self-advocate. One of my kids is a natural self-advocater and has been standing up for what she needs to do and wants since she was very young. The others - no way would they have been ready when they were your dd's age. My ds really wasn't ready for that type of self-advocacy until middle school. If the teacher wants your dd to challenge herself by producing 3-5 sentences when the other children were told to complete 2 sentences, my personal opinion is the teacher should specifically tell your dd to write 3-5 sentences.
I didn't re-read the first part of your post, and I'm not sure what your gut feeling is re the teacher at this point in time, but those two things are both things we encountered with teachers who weren't really wanting to differentiate... and they were both used as subtle ways to create situations where differentiation didn't happen while trying to put the onus for why it didn't happen on the student.
polarbear
ps - my children went to an elementary school that was deep into developing independent learners, so they were all about self-advocacy and trying to "teach" it as early as Kindergarten, but they also acknowledged that the true ability to self-advocate didn't really kick in for most kids until around 3rd grade... so the things they did to encourage "self-advocacy" in kindergarten really weren't anything at all like expecting a child to do extra challenging work without specific instructions. If you had to, I think you might be able to google around and find a few studies or articles on supporting children to become independent learners and self-advocate that would show it's not something you can just expect a child to start doing on their own in K.