When I was in grade 8, I discovered that my ability to do this was way off the charts... in my remedial reading/spelling class

I was also unusually able with "turning one word into another," a specific example I remember was hearing "run" rather than "around" durring a spelling test (not a shockingly impressive example, but the moment where the teacher first noticed it). The teacher pointed out that I had the completely wrong word, and so I fitted the extra letters in around "run." Uh. I guess I'm also giving away just how bad my spelling was in grade 8 by admitting I was not surprised to find "run" on a spelling test. But anywho.... <whistles>
The point is: I have an unusual facility with "reading" words when spelled out by voice. I am virtually incapable of spelling a word out that way (I remember developing at least one serious stomach ache that I was FULLY aware was both real, and caused by the upcoming class spelling bee). I'm so bad at spelling I make a point of not apologizing for my errors, and not making a big point of spell-checking internet posts and emails. (course I'm in chrome right now, so AM spell-checking.) My auditory processing/memory has been assessed as very, very poor, and I would describe it as mildly disabling in every-day situations.
Wait, I'm supposed to be getting to the point: I think this is a peculiar skill, largely unrelated to adjacent-looking skills.
I don't think it suggests that your daughter is 2e (like moi) or anything, just for the record. But I wouldn't expect it to translate into what it seems like it should.
I don't know how she does it, I know how I do it, though. The same way I read text on a page. There is virtually no difference for me, if I have enough time to translate the sound I hear into the image of a letter. In fact, I understand speech better this way sometimes, because I don't have to hear the sounds as fast (there are a lot more parts of the whole sound that serve to confirm an accurate hearing, rather than add new info, using the radio alphabet would be the next step farther in that direction). So it's at least possible that her ability represents especially good visualization skills (where I test as extremely capable).
She's not me and all brains work differently, but I'd _guess_ it's just a quirk.
-Mich