It is my understanding that colleges evaluate the rigor of a particular applicant’s course curriculum in the context of the high school the applicant attends. Some high schools offer many AP courses and some offer none. High schools may limit the number of AP classes a student takes and/or require a student to take the corresponding honors course before taking a particular AP course. OP, it sounds like your daughter is a strong student and will have some “more selective” colleges on her list. If the usual Latin sequence for top Latin students in her high school is to continue Latin through the AP level she should do it too, in my opinion.
I suggest you do a google search for the name of colleges your daughter may be interested in followed by the words “common data set”. There will be a chart listing number of years “required” and number of years “recommended” for high school courses in particular subject areas (foreign language, science, etc.). It is in an applicant’s best interest to fall in the “recommended” column wherever possible. You’ll see that some schools recommend 4 years for a foreign language.
If your daughter does take AP Latin, she should consider taking the SAT subject test in Latin the month after the AP exam, in early June. A high enough score in either exam may allow her to place out of a foreign language requirement of the college she attends, which would free up her schedule to take classes she would enjoy more.