Well, you could wipe ALL partitions, including the SD Card. I would, however, backup everything on your PC first. Then wipe everything. Wiping Data only would solve the App issue (once she logs into her account, it will only reinstall her apps). If you don't want to completely wipe the SD Card, you could manually delete any and all data, especially your backup ROMs, they take up a ton of space.

 

A 'hard reset' will not un-root the phone. If you want to give it to her as clean as possible, do as dreadnatty08 suggests. Wipe all data on the phone and format the SD card. However, once she gets all her info in there and everything set up I would make a nandroid backup of the phone in that state. You are rooted and it never hurts to have a good working backup.