I think you're spot on with emphasising that whatever she's feeling is OK. The Kubler-Ross model gets into trouble when people take it too simplistically;
this page has a good picture. The relationship between a child and a close teacher is an interesting one; it can be hard to know "how much" is OK to grieve, and it'll be important to pay attention, I guess, neither denying the feelings nor wallowing in them, as they fluctuate.
I wonder whether she would like, at some point, to do something to express her gratitude for the teacher's life? Write a letter to the family, telling them something about the good things the teacher did for her, say? Plant something? Paint something?
