We chose to TFMR a single pregnancy so my experience is different.
Throughout the induction process we had some absolutely amazing midwives. We knew we wanted to hold our daughter when she was born but at every step of the way they asked us what we wanted to do regardless of what we previously said we wanted to do. When she was born they asked if we wanted to see her right away or if we wanted her wrapped up first. What your daughter says she wants to do now may change when the baby is born. I appreciate you saying she may regret not seeing her baby boy but let her just go with it - she may change her mind. Our midwives took photos and hand/foot prints. Your daughter can ask for these to be done and given to her if/when she is ready. If she decides not to see him, she may regret it in the future but all you can do is support her day by day.
With regards to the funeral, we were adamant we didn't want one. But once we realised our daughter would be cremated along with other babies we decided to hold a private funeral so we can have her ashes back. This sounds recent so perhaps once your daughter has wrapped her head around it as much as she can, she may change her mind. Or she might not. Whatever she decides is OK.
Before we decided to TFMR we looked to friends and family for guidance. No one could tell us what to do because ultimately we would be the ones dealing with our daughter and the issues she faced. Granted we would have lots of support but it's not the same as dealing with it 24/7. And actually no one wanted to tell us what to do. It was only after that we got lots of comments like "yeah I would have done the same thing".
The bottom line is just support her. Her needs will change day by day. I found a lot of people said "let me know if you need anything" which means when I was in the deep grieving process I was also expected to reach out for help when all I wanted to do was cry. The best ones were when they told me "right, today get dressed and we are going for coffee/wine/dinner/lunch". You know your daughter best, if she's one to reach out for help then follow her lead, if she needs a bit more encouragement then be proactive and tell her you are popping round to have a coffee/clean the kitchen/do the laundry.
I've read various peoples experiences with regards to TFMR, and I believe with twins the lost baby will be born alongside the living baby. That will be hard for your daughter as she will be celebrating the living twin and grieving the lost twin.
It's going to be a tough road for her but it sounds like she has some good support from you. Just take it a day at a time. One day she might need you to hold the fort with her older children, other days she may just want some space with her husband/partner and the children.
The hospital should have some specialist midwives to talk about the lost baby and holding him and funerals etc. We didn't really speak to them prior the birth but as I was in labour for 24+ hours we got talking about if we wanted to hold her and the funeral etc.
You may want to think about some keep sakes. We bought 2 lots of teddies etc one for us to keep and one for our daughter to take on her onward journey. There are a few charities which donate boxes, we got ours from the hospital. There was so much inside and everything was double so we could keep one and our daughter keeps one. We got one from SIMba www.simbacharity.org.uk/what-we-do/memory-boxes/large-memory-box/
ARC is a good resource for your daughter as well as well as SANDS.
I'm so sorry for your loss 