That was a very thoughtful gift. Your daughter did her best picking out fabric. If the quilt is for her, then do what she asks if you can. Quality of fabric is not important to her at all. What is important to her is that you use the fabric to make something beautiful for her.
Why not make a table topper (or two), pot holders and napkins for her? The napkins could be made using an accent color as the bottom of the napkin. Same for the table toppers. Other suggestions, Christmas tree skirt, ornaments, wall hanging, lap quilt.
I think I'd be very tempted to ask her to help me with the project, though! She can always say no.