The kind of quilts that I have made so far are meant to be used an loved. With that said, they get washed and dried just like other clothing and blankets in my house of 2 sons, DH and myself
. Never have had a problem with bleading of color and I very seldom prewash fabrics. As for the shrinkage, which in my case is very little, I kind of like the "cricked" looks that comes after the first wash, and it seems to soften the quilt that much more to make it that much more cuddly. And yes, I use cotton for the batting.
Since this is your Daughters quilt, I am sure it was made with lots of love and meant to be used, wash like you have any other blankets and cloths. If you are concerned about bleeding, use the color catchers, I have never tried them but from the input from this board, they seem to work great!!