Hi, while we have no dancers here and therefore no specific advice, I have also had my shares of similar frustrations with other competitive sports. And of course, when you are spending so much money and time, you want the best development fit for your child to grow.
Our experiences are with competitive USA swim (current), competitive soccer team and tennis playing USTA tournaments (current) -- and some sports are more dependent on the level of other kids practicing with you -- but I agree with GM5 - in the end, if you are not happy with the development level being offered, can you switch studios?
If she loves dancing, maybe you could consider changing studios or not competing for now. Good luck.
Or, can she do just private lessons? (In tennis, that is not possible, since you do need to practice as well, hence the frustration if you cannot find similar ability kids). In other sports, you see many people changing teams/clubs/programs to fit the kid. In tennis, we've switched quite a bit, because of it.