My son entered Kindergarten this year. I was lucky in that our principal and Kindergarten teacher recognized right away that my son was very advanced for that group.
They put him in first grade after a few weeks. My son had never had any schooling before and really struggles with writing. After 2 days in class his teacher said she didn't know why he was there and couldn't do it. I asked her to keep him in until parent teacher conferences and give him time to adjust.
By parent teacher conferences he went in 3 weeks not being able to write to writing sentences and keeping up with all the work and was top of his class with tests they take. He reads way above his grade level and at conference she marked him average for everything and concentrated on what she felt was below average (his writing. I left heartbroken that she still didn't get that it wasn't about what he knows to fit a traditional class it was about his ability to learn and absorb new things.
Anyways I had asked the school to test him as my state does have to test if the parent requests it. Friday they called me into a large meeting with Principle, gifted coordinator, counselors, testers, teacher and told us he hit the ceiling on all the subtests for the Reynolds assessment he did and maxed out the IQ score on the test at 160+. The counselor that tested him worked for the district and became a huge advocate for us as she has worked with kids for 20+ years and said she has only seen a few like my son.
So now to your questions.. In my limited experience with this stuff you know your child is gifted. There is almost no chance a child her age reading Moby Dick is somehow average. I was losing sleep and terrified of the testing because I felt like what if he doesn't do well what if they don't see what I see.
Now I have a whole team of advocated understanding my son is different. His teacher was in shock and did a complete turnaround to realizing his work may not look like the other kids but he has other things he is working on in his mind. Teachers might expect a child to show certain things when moderately gifted a child conforms perfectly to a traditional class. When highly gifted a child acts and behaves different. Have you observed your daughter in class? My son looked like he wasn't doing any work just sitting there (watching the other kids) then the last minute would try to do all the work sloppily. He doesn't care about sounding out the words they do he is focused on something else.
I would do two things. Ask for a meeting with the principle, teacher, psychologist (who does the testing in the district) have you daughter read a passage from Moby dick and explain it (or maybe record at home with your phone if she is too shy to perform in person) Bring her math work and show them. Then ask for the testing. Explain to the psychologist your concern about her being shy or going underground.
The reality is testing does not change who these kids are. Your daughter is the same tomorrow as she was today regardless of some score they give her. YOU know something is there hopefully the test will serve to show to others what is going on. Which in my case worked. If it doesn't don't stop until someone sees what you know to be true, and accept public school just might not be the right forum for her. They told me outright kids like my son might never really get what they need from public school.
Sorry for the long post. I know the stress of the teacher being way off base for feedback. Your daughter sounds special and no matter what school does you can continue to provide her those rich (frog dissecting) activates at home.