When my brothers and I were kids our mom would have us help bake a cake for Christmas eve dessert. We'd decorate it and have a great time. After dinner we'd sing happy birthday to baby Jesus and have the cake. DH and I are now doing this with DD. She's really excited about making the cake and it's helped divert her attention from Santa back to the real reason for Christmas.
(I just wanna say your daughter is SO adorable!)