Oh, your story sounds so familiar to me. My oldest is 11 now, and we've struggled a lot with the verbal (and physical) aggression. She was (and sometimes still is) a "zero to blind rage in 3 seconds" kind of kid. She was a kid who "knew" better, but couldn't access that knowledge in the heat of the moment when she was upset. She was as unhappy about it as I was. It sounds, from your description, like this is an issue of your dd's skills development and not a problem with how you have parented her. It's not your fault, but you can help her do better.
It sounds to me like your dd has difficulty with some vital emotional, cognitive, and/or communication skills. She sounds like my dd, who really has trouble being able to stay calm enough to engage in the communication and problem solving that would avoid the verbal aggression. My dd has difficulty being flexible--she'll have an idea how things should go and she really has difficulty when faced with a situation that isn't going according to her plan. She just can't easily shift her thinking, or come up with ways to approach a change in plans. She had trouble identifying and communicating what the problem is and how she feels. And so on. KWIM? It's not that she's a bad kid, it's more like my dd has sort of a learning disability with regard to certain emotional and cognitive skills that are necessary in order to deal with adversity without melting down. Additionally, when we sought professional help for these behavioral problems, for the aggression and horrific meltdowns, we realized she had a lot of anxiety as an underlying problem (which further reduced her ability to cope). So underlying issues are something to look at too--how's her sleep? her eating? her overall mood? what stresses her?
Understanding this as a problem of skills that she needed help developing, rather than as a discipline problem on our end, really helped us begin to approach the problem more effectively. One part of this multi-faceted approach was using time-outs every single time she became aggressive. We simply insisted that she sit, in the same room as us, until she was calm. The whole point of this was not to punish, but to emphasize the importance of getting calm. She could not react appropriately if she could not stay calm. In order to learn how to stay calm, she had to learn both how to get to calm and the importance of calm. I really did not think she would sit in time-out (she was 8 at the time) but she did. While she was taking time-out, we were nearby but we didn't talk to her (she needed that space to get calm). We would, if needed, remind her that we would talk when she was calm. After she did calm, we would talk about what happened, what she was feeling, and ways that she could have responded differently (not "better" because she saw that as a criticism and would shut down). We also had a lot of tools around the house to help her become aware of her feelings and to give them names, so that she could begin to be aware of when she might need a break, or to walk away, or to get help *before* she lashed out or had a tantrum. We did a lot of problem-solving together with her: when problems came up we made we 1st) understood her concerns and offered empathy, 2nd) shared our concerns (not "no, you can't have candy" but "I'm concerned that if you have candy right now...."), and 3rd) invited her to solve the problem together with us. We tried to handle ongoing problems proactively, doing the problem solving outside of the moment the problem was occurring. We had a lot of tools available to her to help her calm down, lists of things she found soothing. We also did use a points system to reward progress, which she loved and which got us through a very rough time and jump-started a lot of lasting progress.
Also, we found it difficult to stay positive with such a challenging child. We made a point of setting aside "special time" as many nights a week as we could. This was time she'd be with a parent, one-on-one with no interruptions, doing an activity of her choosing. She led and we followed, and we would limit ourselves to positive interaction only. I cannot tell you how important that was for both us as parents and for her, and for our relationship with her.
I highly, highly recommend a book called The Explosive Child: A New Approach for Understanding and Parenting Easily Frustrated, Chronically Inflexible Children (the newest edition available, 2010 I think-it does make a difference, imo). You can get an overview of the ideas in the book here: http://www.thinkkids.org/parents/. You can get an overview of the skill areas in which a child can be lagging, leading to difficult behavior, here: http://www.thinkkids.org/docs/TSI%2010-09.pdf. That skills list can help you figure out which skills your daughter needs to work on in order to do better. What I loved and found very helpful about this book is that their view of difficult children is so compassionate, and the approach really practical (though not an easy, quick fix). You can also learn a lot about the book and approach here: http://www.livesinthebalance.org/ Another helpful book is Raising A Thinking Child, which is about helping a child develop problem-solving abilities. You might also like What To Do When Your Temper Flares, which is an anger-management workbook for kids to use with parental help.
Just as an example of the approach to helping a child learn skills that is outlined in The Explosive Child, the candy situation you described reminded me of a situation regarding cake with my dd. I remember so clearly one morning when my dd asked for cake at around 10 am. On this day, I happened to be relaxed and paused to think before I answered. Based on past experience I knew that if I said "no," there was a solid chance she'd flip out. So instead I said, "you want cake. What's up, are you hungry?" She said, "i just want cake." I said, "You saw the cake and it looks good. You want some." She said, "yes." So I said, "That is good cake. Here's my concern: I'm afraid if you eat cake now you won't be hungry for lunch. I notice that when you go a long time without eating something healthy, you get really cranky. Then we fight. What do you think we can do so that you get cake, but you also get healthy food and don't get cranky?" And she thought for a few seconds then said, "what if I have half a sandwich now, then a piece of cake." I thought about that, had no concerns about that plan, and told her yes. What worked for her in that situation was that before I answered, I took time to let her know that I heard her. Yes, she wants cake. It's okay to want cake. Taking the time to empathize and let her know that I hear her keeps her calm. It also helps her identify and communicate the problem/her concerns and her feelings. Once she communicated her concerns and felt heard, she was able to hear my concerns. And when I present my concerns rather than just saying "no," she is able to listen *and* I'm modeling the thinking and communication skills that I want her to learn. When I ask her for ideas to solve the problem, I'm helping her learn to problem-solve *and* maintaining boundaries because any solution should address my concerns as well as hers. Does every single interaction work this well? No. Learning to work with her this way had a steep learning curve for me. And I'm still not as consistent with it as I'd like. But it really, really has helped us help her learn a lot. Is this kind of approach to problems the only thing she needed? No. But it was one very important part of the process.
I've written a novel, so I'll stop. It will get better. She'll learn and she'll mature with your help.