So far, I've read that it's acceptable to say "she" because your daughter is only seven. I've also read that the who-harr might be down to the age of the teacher.
Maybe.
Here's my story - in the autumn of 2020, I went back to college at the ripe age of 42, to retake two GCSEs. Remember, this was the year of the pandemic, lockdowns, etc, and even those of us who'd not yet had covid were still in a state of heightened anxiety and general confusion; it had been a horrible year.
My maths teacher was was calm as could be, however, my English tutor -whilst excellent at teaching the subject- was a thoroughly, thoroughly nasty, bitter, and spiteful person. He got away with it with some of the younger ones, but us "mature" students had got the measure of him. My nerves were shot to pieces as it was, with the pandemic and other stuff in my life that had kicked-off the year.
Anyway, one evening when I went to class, he was in a worse mood than normal and had decided to sit us in the library to do some of our admin work on the computer system as opposed to teaching us, so to speak. Unfortunately, he didn't give clear instructions on what to do, so when the next person along from me asked me for clarity (bearing in mind they were two spaces away for social distancing) I had to speak maybe slightly louder than I would have liked (albeit not loud at all) and said "blah, blah, blah, and then he's told us that..."
Well, next thing I know the tutor is booming across the library to me, saying he has a name and I should show some respect. FFS, he and I were practically the same age, give or take a few years, and I'd not been spoken to like that it decades. I was mortified, absolutely mortified.
To this day I still don't see what I did wrong. Thus, assuming all in the OP is as it actually happened, it's not because the girl in the OP is younger, or because the teacher is older, it's because the person who objected it a nasty piece of work to have reacted how "she" did, not least to a child. If that was me at seven, I'd have been crushed by it.