I think it's the right thing to do, OP. Keep it to return at some point, and lay down some rules about returning it too, so she doesn't use it to ignore everything, but instead uses it for self-soothing. Sure, many people take away their kids lovies or blankies or special object because they feel the child is too old or has outgrown them, and *that* may or may not be questionable depending on your parenting style... but I think *this* is more akin to her using it to hit other people.
My kids usually have short-term treasures (shell from the beach, treasured for a week at the beach, "where's my shell?! need my shell!" but after getting back home, they forget the shell. If the treasured shell becomes something to hit siblings and others with or becomes a reason for outlandish temper tantrums or screaming fits though, the shell has to be put away, at least for a while. What you're describing with her blanket is pretty similar IMO.
I might talk to her about her behavior first, praise her good behavior, comment on how nice that is. Ask how she feels about her behavior and if she feels it is easier to behave kindly while blankie is missing. If it's hard to behave kindly when she has blankie. If she says yes to both, then I say blankie can stay missing a good long while, as in years. If she says no to both, maybe re-find blankie for a day, but tell her you think blankie should be only for x timeframe, bedtime maybe?
Book loving, editor mom to 2