78/80 = 97.5% I believe you that this is what it is but I question the wisdom of setting a test with such a pass level. Is it a normal school?
The other things you write don't exactly reflect well on the school either.
Clearly the emphasis is on passing rather than doing well and as your DD is only 7 or 8 years old, she's just responding to that.
Its just dawned on me, that the school set this test just to keep your DD busy! There's no way that other, less able, children would be able to pass that test either so its about setting a high hurdle which will mean your DD is likely to fail and then the school have an excuse for making her go through all the preparation work again (along with many others who are still earning and need the repetition).
Looking back, DS2 had the same problem in year 3. He had to get 100/100 in a weekly times table test, whilst the rest of the class were still ploughing through the 6x or 7x. It took him 6 weeks to achieve perfection (he got 98%, 97%,99%, 95%,98% the other weeks).Then as the other more able students graduated from the 12x table test. the teacher lowered the pass level to 95% which they could pass within a week or so and join DS2 in the newly created extension work.
God, that still irritates me even when I remember it now!
Well, if you are going through what I'm just gratefully reaching the end of (DS2 is in year 6 now), then my advice would be to decide whether you want to emphasise education at primary school or just let things slide and enjoy your child's childhood.
If you want the latter, then do nothing (except let DD in on the teacher's motives so she can stop stressing). However, if you want the former, you will need to pin down what the school will do for her for the next 3 years - have a good look at who'll be teaching her. Then find out what other solutions there may be - a new school or HE, and choose the best solution.