How a company and individuals assess employment law is very often different to how a court would view such a case.
For the company to fire a manager of 'x' years service would take a time and cost money, to ease a junior out and even pay them off to avoid constructive dismissal is often the easiest and cheapest option.
Given in the new structure the managers name doesn't occur could mean the manager has been given a verbal, or perhaps written warning, the company then needs to ensure they have covered their back by ensuring this employee receives their due support as a manager, additional training in this case.
However, given the landscape of the future group structure, it could be reasonable to expect the company doesn't expect the manager to survive in their role and for the first written warning, and the subsequent training to result in their dropping back into their old ways. Perhaps at review time, perhaps expecting more staff to now come forward and complain about her.
I think your daughter is correct in writing to acknowledge the findings of the company, to formally ask why the company feel it is fair to expect her to return to work under this tyrant of a manager and why they should use your daughter to establish if her manager has learnt anything from her training. Surely the counter argument to this being perhaps personal is that she doesn't treat other members of her team in the same way, or does she?
In the letter I would also suggest your daughter requests that someone from HR sits in on the appraisal and that there is a one to one meeting following the appraisal with someone from HR. Given that this has all happened of late and they are appraising her position given the findings of this report staggers me to be honest, considering your daughter has been out of the management of this person for a reasonable period of time, is she actually the right person to appraise her?
If they insist on this manager doing the appraisal and to having someone from HR in on the appraisal, I think given the circumstances your daughter is within her rights to have someone with her at this appraisal. The role of this person is purely to support, not to advise, as it wouldn't be a formal disciplinary procedure, but, I would suggest against having a co-worker in the appraisal.
Should the request of others being there be ignored, then I'd suggest your daughter if possible attends, perhaps uses a Dictaphone to record the conversation and notes any key areas of concern back to HR, if need be re-opening the formal complaint against her manager if she feels intimidated in any way, of course the need to detach the element of shock from this appraisal needs to be taken into account and within reason your daughter needs to fully co-operate with the appraisal and not provoke in any way, e.g. no reference to the grievance procedure.
If that is raised, she should make it clear she is not prepared to discuss it, and if the manager touches on this area again your daughter will consider the appraisal to be completed and her next destination will be to 'x' in HR to formally complain about her manager again.
Unfortunately the bigger a company, typically the more they hope they can brow beat staff, if they get caught twisting or breaking the law, these are the organisations that can afford to pay out thousands of pounds in compensation, smaller firms have to tread carefully, as payouts are very hard to recover from.
I wish her well!