I would be honest, and tell her that death is a consequence of life, etc.
Here are some other threads on the topic, which I hope are helpful.
Regarding the eating, I think it's a tough situation. I think children should exercise some control over what they eat so that good eating habits can be developed. On the other hand, I think some amount of fish or animal protein is a good thing to have in a child's diet. If you're not okay with her being a complete vegetarian right now, I would do my best to reassure her that the fish is really dead when it's cooked, and maybe open up a discussion of suffering and how fish simply aren't as advanced as we are, so we can guess that they can't suffer as much.
