I think you're being absolutely considerate already.
You have already
not practiced in the evenings,
Turned the piano sound off,
And
Restricted your dds practice to three half hour sessions a week.
Now you're going to install a soundproofing system!!
Can your DD play in school before starting time?
Can your DD practice in school after classes?
Your DD will need to practice more than that. After grade 5 pieces and scales get more complicated, and you're not being fair on your DD by restricting her life just because your neighbour in a terraced house has a problem.
TBH, I think noise pollutant officials would laugh your neighbour out of the office.
You have done what you can, if she has anything else to say, maybe contact a mediator?
I think your neighbour is being unreasonable, there are limits to the world, you're not able to sort this woman's issues out. Are you to lobby for a change to flight paths or spread straw on the roads for her too?
You've done the absolutely maximum already.
Her problems with her hearing and her anxiety about noise are not your problems. You've bent over backward to help her out, but your DD and family have every right to live without walking on eggshells or thinking of moving house to get away from this woman. She may be distressed as the first signs of dementia, but that's not your problem either. Of course you are compassionate towards her, but she's not your responsibility, your DD is.
I have to say there's a tiny part of me saying why not invite all your dds pals in the orchestra over for a jam a couple of evenings, and then pare it back to just practicing the piano every day, as a compromise. Make sure there are plenty of violins and piccolos.
Do t be a pushover. I think your neighbour is playing the little old lady card, but is actually abusing her position.
You have a responsibility to yourself, your DD and family. Don't shirk it and kowtow to someone who could have a problem with a mouse fart.
Contact a mediator if she continues to complain. I think you've done plenty to sort it out. I suspect she would like zero practice, but that's not on the cards. And now you feel like moving!!
She's definitely overstepped the mark, and is unnecessarily distressing YOU!
Mediation may be the way forward.