Re "The problem I have is would the school even see it as bullying and what can they actually do?"
The school will hopefully acknowledge that it is a problem even if they do not share your definition of it.
The school can set up a meeting between the two girls so they can talk about their feelings etc.
You could ask to be present at the meeting, unless you would rather not, and of course the other parent/s could too.
Re "My ideal is they keep an eye on it and keep them apart but I don't want to be seen as over reacting when a lot of the time they appear outwardly as friends."
You can ask for them to be kept apart but is this what your dd wants?
Bullying is very dis-empowering for children (and adults) so one way of helping your dd is to consult her and ask her what she wants to do.
Does she simply want to stop being this girl's friend? Does she want a chance to talk together about how the words are making her feel and give the other girl a chance to change her behaviour?
Rather than getting her to pretend not to care can you remind her that people who behave in a nasty way are not really worthy of her friendship, she doesn't have to be friends with this girl, nor does she need to pretend not to be hurt when she is.
She may feel she needs your 'permission' to exclude this girl from her circle of friends.
She may need your help to articulate how to say "That's not nice and I don't want to play with you today because of the way you are treating me."
Walking away can be a way to do this but your dd needs to know she does not deserve this type of behaviour and she needs to know you are there to back her up as she is very young.
Good luck.