Oh, God, yes, those terrible moments when you realize your child has inherited the exact, precise trait you have always most hated in yourself! YABU and YANBU, and it?s pretty clear from your OP that you do sort of know that. Her life already ruined at age 5, yeah right.
About shyness, may I provide a multi-cultural view? I have only been in this country six years and I still notice that the British particularly value what they call ?social skills? in quite small children, one of those cultural rules along with ?the playing fields of Eton? (your son?s a failure if he doesn?t love ball games) and ?cleanliness is next to Godliness? (if you don?t wash your hair now you must be an axe murderer). Now I grew up in the Middle East, bounced through the refugee process around countries like Sweden and Canada, married my equally shy husband here and immediately spent the next two decades in far East Asia. In none of these countries would a child even be in school yet before 6!
This isn?t to deny your perception that your DD is very shy, sounds like she is. But where I?ve been most of my life the advice would be: don?t force her. If you have a delicate flower, you keep her in the greenhouse a little longer and plant her out later in the spring. If your ankle is sprained, running a marathon will make it worse, not better. Acknowledging she?s shy will help her to learn strategies. For instance, when they meet new people I still prompt mine (some of them teenagers), ?Shake hands and say hello to Mrs X, and then you may go play.? This gives them something specific to do, cues Mrs X that the kids are shy, and demonstrates that even so I?m still a Good Mother who Values Manners. At the nativity play, teachers will quickly learn to cast her as a wordless lamb instead of the Virgin Mary, and you can tell her to look for you in the audience (sit front and central and give her a good wave, it?s hard to see from the stage) and just keep her eyes on you the whole way through, so at least her head will be up. As for birthday parties, some will remind you they?re not at all necessary, but she might well want one even if they make her shy. In our family it?s always been considered normal that at the moment the cake comes out, the birthday child will be having extra birthday cuddles in mum?s lap, pretty much cheek-to-cheek, and we will cut the cake hand-on-hand which gives us something to look at instead of all the singers.
You do have to be your child?s advocate. Ask the teacher, or DD, if there?s one perhaps also rather quiet child she sometimes chats to, and invite that child for a short playdate, perhaps with mother. And put out play-dough or paints or a paddle pool so they can play side-by-side instead of directly interacting. When you drop DD at school try to look round and say, ?There?s Sarah, she?s having trouble with her coat, let?s go help her with the zip.? As classes are reshuffled from year-to-year ask the head or the teacher to try and keep DD with at least one or two friendly kids; I still do this for DS (9).
When we first moved here 6 years ago my older son?s new teacher got cross because he didn?t look her in the eye and shake her hand at the door the first day: ?You need to teach him some manners!? I was too shy myself to answer, but when I got home in tears, DH reminded me: ?In the country we just came from, it would be so arrogant for a small child to stare in an adult?s eyes and touch them without permission!? I was shy, still feel it often, but you notice no one can shut me up!