That might be true for some kids. Most other kids a non-functional hold means that is something going on. It could be minor or major.
It is a symptom of a bigger issue. My son couldn't hold a crayon, pen, paint brush, et in a functional grip. This was a symptom of dysgraphia and dyslexia. I was completely ignorant of the situation until I pulled my son out of school. Yes, I had flash backs to play groups and times when it was obvious that something was not quit right.
It is great you have those degrees in ART but you do not have degree, related training, or a parent that has been there to realize this holding the brush correctly isn't just about art. It is a developmental mark that at 5 she should most likely have. How much fun will art be if her fine motor skills won't let her do what she wants? If she doesn't have these skills mom and teachers need to be giving them to her.
Early art programs are not just about creating art but developing and practicing other skills: fine motor, colors, texture exploring.
In this link it shows 2 ways to hold the brush..http://painting.about.com/od/paintin...ngBrush.htm.in you take the first picture and you really can add several other functional grips but if a 5 year olds grip is more like the second (entire arm movement) there is an issue. She doesn't have mine motor skills and needs to be urged to use them.
The over sized reproduction is also a sign that something isn't quit right. OP dd does not have the fine motor skills or possibly the eye sight (could be normal developmental) that facilitates her ability.
This teacher might not be correcting a problem in the right way. We do not know what exactly she is doing. Kids can be very self conscious. Her dd can see that she cannot do as well, and that she is getting "extra" help. The teacher can be doing everything right just the child is self conscious about it. My HOH child was embarrassed by early ed/speech teacher's/adults getting her attention by touching her, she was very aware that none of the other kids got the same treatment. Even though the adults were being discrete...she did learn to watch for the cues to change activities, but it was part of a "process" that was different from others.
Her child might not have disgraphia, she could be just a little behind developmentally. But these things the teacher is doing are pointing that things need to be investigated, and fine motor skill need to be works. Arts/crafts are often done to build up these skills. I wouldn't down this teacher see's something but not with the child enough to really know. I see something in the painting size and "non" functional hold because I have BTDT with my child.
Somethings kids do not grow out of, or waiting longer only makes it harder to change. If someone would have noticed, If I had known. We could have corrected and worked on things without my son feeling like a failure because he wasn't like other kids.
Perhaps the child will self-correct watching other use theirs? Perhaps the child is fully able, but using a different approach? Perhaps the child is finding their own time table? Perhaps the child has a disability.
Encouragement, cheer, warmth, joy, partnering, adding more developmental activities all seem like legit approaches to concerns about disability.
Continually correcting the kid? Not appropriate.
Shoot, here, the kids are still kicking each other under the table in the 5-7 homeschool art classes.