Okay, as the Canadian in the room: your daughter is exceptionally young for a pre-pre competition. A 5 year old would normally be in Canskate; introductory at best. That said, there are exceptions, and I have seen a (very) few 5 year olds at pre-pre. Has she competed previously, and has she enjoyed it? Does she have to skate pre-pre, i.e. is she dequalified from Introductory, or is she skating up because this is a Starskate Comp (and also, of course, there are no more programs at Canskate anymore as of 2011/12!)
I note also that this comp has no age limit: she may be skating against kids who are significantly older than her; often, there are age divisions to prevent your daughter from skating against, say, a 10 year old (and there are 10 year olds and older at pre-pre A), but, not in this one.
Now, you are referring to working on elements to "move up". Are you meaning the Preliminary Freeskate test? If so, then, remember, that kids land axels at that level, as well as a double jump; thus, if you are moving to that level, and you don't yet have a loop, flip or camel, then, yes it sounds like it would be a stretch, and I agree that if she is to be competing at that level, then, yes,you would need to work on elements. Again, a 5 year old would be very surprising at that level.
If you're referring to Pre-Pre B as your move up: then, remember if you're doing StarSkate Challenge later this year, there are no "a" or "b" at that level, and she will definitely need that loop, flip and camel - not to mention a lutz. The only "single" you can't land at pre-pre is the axel ...
If your kid is tough enough to go out there and skate in a summer comp, maybe against kids twice her age, and still be happy ... then, you know your kid best. A competition will take away from the element practice. Yes, it's nice to skate for her grandmother ... but, how will she handle it with the additional pressure of skating FOR grandma? Is she experienced enough a competitor?
I'd have an honest discussion with the coach about whether she thinks your kid is ready to compete at that level, and a call from the coach as to what the "level" of competition will be at the comp itself, so you can make a good decision. Some of the summer comps are quite challenging, some not so much; I know the Ontario and Quebec ones well, in terms of level, but, outside of there ... not so much
ETA: sorry, just saw your note that she'd only competed in club comps before.