Hi Misty, I really feel for you. I don't really have much advice, but went through similar with my DD all through junior school. It used to make me feel physically sick when she came home in tears.
I don't know what it is about certain children, like my dd, that makes them a target for this kind of bullying. I think they are probably the nicer, quieter children who don't retaliate. I always tried to get her to play with other children so that the bullies could see she didn't care, as I do believe that bullies do it to get a reaction, which makes them feel better about their own pathetic lives. It's difficult for our kids to do this though, specially when their self-esteem has taken a knock. I used to have long chats with dd about how these bullies were actually sad inside, and were probably jealous of her (don't know if that's true really!) I'm not sure that it really helped her to deal with it at that age.
My dd is now 16 and has a lovely group of friends, none of them are the ones she knew at junior school. Life got much better for her when she moved to secondary school, as there were a lot of new people to meet and make friends with. That's not to say that she has had no friendship problems at secondary school - there always seem to be a few who have to be mean and nasty - but she has been able to see them for what they are, and move on to new friendships.
I know this is not much comfort to you at the moment. I would persevere with talking to the teacher, and if that doesn't help, go to the head. I know it's difficult to deal with this, as they can't make children play with people they don't want to, but it's not acceptable to just ignore it. If your dd is so upset that she doesn't want to go to school, then they need to help her. Perhaps they could help her to make friends with other girls in the class/ playground. They can't all be nasty bullies!
I'm sorry I can't offer more practical advice. There have always been bullies, and there always will be. I think we just have to try to teach our children not to be victims, to take control and move on - leave the bullies to stew in their own juices! I know this is not as easy as it sounds.