Duffy, as I understand it the situation in Wales looks different to that in England while actually being the same..
The thing is, in Wales (particularly rural areas), many nursery / pre-school classes are within the school building. In England, though there are nursery classes in some areas, pre-school settings are commonly separate either in management or location (or both) from the primary schools. In both countries, school admission regulations apply for the entry for Reception and in only a very few cases is there any precedence given for a child who has attended a nursery class in the same school (however, many areas of wales suffer from under- rather than over-subscription for schools so this is seldom an issue in practice).
So in Wales, a child may go to the school building, in the school uniform, into a nursery class for the year before Reception. However, that does not alter the rules for entering Reception in Wales - the child still has to be 4 by 1st September to enter Reception. This does look confusing, and i can understand how your informant could have got the wrong end of the stick, particularly as in small Welsh schools Nursery and Reception classes are often mixed. Crucially, in these Welsh nursery classes (even when mixed with Reception) the adult to child ratio must be higher than in Reception or KS1 - I've found figures of 1 to 13 and 1 to 10, but this is 2 - 3 x the ratio in Reception / KS1 classes.
The school you wish your child to enter does not have a nursery class, with an appropriate (and legal) adult : child ratio for a nursery class and a group of children of a similar age. It has a R-Y2 class with an appropriate (and legal) adult : child ratio for children who are already 4.
I understand your distress, but this really does not seem to be an optimum solution for your daughter - she is at an age when she NEEDS a high ratio of adults to children, it would be wrong to put her in a class with very much older children - especially as in my experience (I've taught a R-Y2 class for a training placement and would not willingly do so again) the teacher effort is very much concentrated on the older children (Year 2 teacher assessment and all that stuff).