Along with the concept of one teacher and 20 kids is the concern that someone in the class is not being nice to her. The fact what she does is not full out blatant as in she didn't scream my mommy she whispered in the child's ear so the teacher didn't hear. I would talk to her about school and see if you can find out if some not so nice behaviours are happening at school and to whom and by whom etc. Talk about why it is not right and just because another child is doing it. etc.

Time out should not be upstairs but it is ok to section off an area of the playroom, around a corner even better, where she can go when she wants to be alone and not with the other kids. The Christmas holidays will be a good test to see if it is happening all day or only at certain points in the day like when she is overtired. If you find it is an overtired type reaction then what needs to happen is when she gets home from school give her a time upstairs then watching tv where she can regroup from the chaos of the day.