No doubt, as others have posted, it is time to terminate. If you are worried that she might bad mouth you to others, I would word the termination letter to the effect of

"....Dear DCM, it is with deep regret that I must terminate our contract. Special Snowflake is obviously gifted and at this point, I must recommend she be put in another more advanced preschool program. I cannot meet her needs. Regretfully,..."

Then smile and deliver.