I would keep it simple and keep it easy. Doll clothes? A doll quilt? Nancy Zieman had a show on her TV show that is still being shown. It featured her granddaughters making a doll quilt with her help. You can find it by logging into Nancy's site. I wouldn't let her use a rotary cutter for now... they are razor blades with handles!! I think it would be better if an adult do the cutting even with scissors for now. Scraps of bright fabric will be nice for her to get her imagination going, also. That's what little girls in the past learned to sew with.
It sounds like great fun for her and for you!! Enjoy!