"She could use three of the four days on the old pass and then trade it in for full dollar value towards a new pass if this were true!"
Yes, she could do that and still receive full dollar credit, but those days would be credited against the new ticket. So, she would, in fact upgrade within 7 days get full dollar credit, but when she gets the upgraded ticket it would only have 1 park day and the 2 or 3 Magic Plus options. It isn't like she is getting free days. She will just pay the difference between what she originally paid and what the new ticket would cost.