School sixth forms in England are supposed to receive funding for students up to 19 yrs old. So I don't see why the suggestion isn't feasible (which was your question) if it fits around subject offerings, if she's doing subjects that may not be offered to the year below her it makes it less feasible. Unfortunately you need a bit more than 'feasible' if the school is currently reluctant.
A sit down with her teachers and her to hammer out a solid, achievable plan. Her showing commitment to it by putting in the effort before the baby is born. Maybe some check in points where the approach can be reassessed if it doesn't seem to be working.
I think you should also look into the discrimination route as well, though. It does sound like they are reluctant to have her do her A levels there because they don't think she's deserving now she's pregnant (since they took her on to sixth form with the GCSE grades she got and her discipline record before they knew she was pregnant, but now she's pregnant they're suddenly concerned she won't hack it). I think you would need proper legal advice about that though.
Have the school ever had someone carry on for a third year of sixth form? Maybe because of illness or something? If you can show precedent for this approach you might have an easier time convincing them.
I would call some of the responses you've received on here bizarre, except this is par for the course on AIBU - It seems to be a blood sport for some posters.
I can see why some people think and FE college might be best, but I can also see arguments for staying with an environment she knows. You know her far better than any of the posters on here and exploring an option, finding out if it can be done doesn't commit her to it - it just gives her options. Good luck with it.