Thanks for the reply, everyone.
DeeDee, our district doesn't have any gifted program and I haven't found any written policy. I know lots of parents who feel strongly about this.
Indigo: yes, I gave the teacher details about DD's repertoire and her past experience (short of sending her DD's performing arts resume). I haven't heard from the teacher since... I will have a chance to talk with the principal about other things and will bring this up again.
Mana: I know what you mean. Our teacher obviously felt that kids who have had a few years of private instrument lessons are all advanced. This is true relative to kids who have never had lessons. But kids who have had a few years lessons can be at vastly different levels.