I think probably IABU , but I find it so cute when she writes makes a card or picture for her friends and signs it 'luv'. Plus it makes sense phonetically - I do love emergent spelling.
This morning she wrote an email to her friend and signed it 'luv', then noticed the red squiggly underlining from the spellchecker and asked me what it was. I'm ashamed to say I said it was a decoration .
I need to start correcting her, don't I, before the wrong version gets too entrenched? She is 5 and has just started year 1.