Well, I would have never worn it, but as long as her bits are covered up, I believe it should be her choice. I also don't think it is going to cause any mental or physical harm to young children - they are accepting of most things, unless they have someone elses negative opinions drummed into them.
However, in making a decision to wear something like that outside of their own home, especially in daylight hours, I hope that any adult will have realised, and accepted without letting it upset them, that some older children ‐ and unfortunately some adults too - will inevitably laugh out loud at them, they may even point fingers, and/or shout at them - which would of course be very rude and nasty of anyone who did so.
Unfortunately, for their own sakes, I do hope that any adult who does dress against the norm in the society they live in, will be strong enough to shrug off any ignoramuses atrocious behaviour. But sadly, if they are not the sort of person who can say to themselves "Fuck them, they are the unacceptable ones here, and I won't let them either upset me, or dictate to me, about what I can wear", then they would probably be better off just sticking to the norm in their society...
I will say though, that I saw a couple of photos today of so called "funeral dresses"- I don't know if the 'shop' was in the UK, but I think the advert or article was in the Daily Fail on-line - anyway a company seemed to be marketing black dresses with a long opening at the front, which if I am remembering correctly, went nearly all the way to the crotch, with something like loose corsetry laced across the front. I would be judgemental if I saw anyone wearing that to a funeral, as it looked totally inappropriate, and even insulting to the grieving family of the deceased person - unless it was the deseased person's partner, and she knew that he would have loved it!