The decision:

DH and I chose to push back against the advice of the camp teacher of the 8-12 year old group and strongly suggest that DD be put with the other group (13-15 year olds). DH performed this task in a very kind and thoughtful way (he's good at that).

Items that went into our thought process:
A) The teacher stated she felt DD could be a good helper in the classroom (the classroom was composed of mostly 8 year olds). DD is not there to "help".
B)This is a 2 week residential orientation for parents and their children to help them successfully transition to a move overseas. It covers cultural diversity, resilience, education about new country - big stuff. DD needs the education.
C) DD is a rising 8th grader even though she is young and tiny (I bring up the tiny because people often assume she is even younger than she is).
D)Camp is also supposed to be fun. DD has the right to socialize with kids who are close to her age. She also wanted to be with the older kids with who she can process this information.
E) Although DD13 had a fit that DD12 was moving into "her" group, DD13 eventually acknowledged that DD12 had the right and need to move up. DD12 promised to be nice to big sister and work on the sibling rivalry (younger DD tends to be the bully).

What have we seen after the move to the new group? Today DD12 and all the 13-15 year old kids ate breakfast together, and we later saw DD12 leading all the kids at some game. She had her notebook out, giving directions. She was smiling. The leaders of the older group were absolutely fine with her move up and said she did great.