How tall is she and what is her inseam? She may just need to do some minor things if she is not under 5'6" and/or short of inseam.
If she is 5'6" or taller: have the bars been adjusted closer and of the right height? Have the springs and sag been set right? Shaved seat?
The shorter subframe and lowering links will bring the tire closer to the rear fender when bottoming, and there isn't a ton of clearance stock.
I would recommend a max of 1" shorter travel, and make sure the shop knows what they are doing.
An extreme case was a guy that shaved the seat, lowered the bike 1", and also ran 19/16 wheels. I think his wife was like 5'2".
I personally would recommend a KX100 if she is 5'4" or shorter and a new rider. The smaller size and weight gives them more confidence.
No she is tall for a girl in my opinion, just under 5'8". She is riding a KX100 with 3-1/2 bar risers on now. its the seat to foot peg distance that makes the 100 too small, otherwise she loves the smaller size and weight. The 125 at its stock height is just a little too tall in that she is not confident. When it tilts on her she has a hard time holding it up. What are my options with the springs and sag for dropping the overall height at least an inch? How difficult? I really never messed with suspension adjustments so I had no experience. I just hate to shave the seat and make it any harder on the butt end than it is now!
She is plenty tall enough to be riding the bike with stock height suspension. If you lower it it will be harder to put it back to stock once she gets better.
I'll see if I can get a pic of the 2003 seat I have to show how they look. The older seat is shorter and rounded more across the top, so it allows you to get your legs down but still has plenty of padding.
The stock suspension is probably to stiff for her, not letting her weight naturally lower the bike down to get proper sag. According to RaceTech the stock bike rear spring is good for a 195lbs rider.
Fork springs are good for about 165lbs with stock tank or around 145-150lbs with large tank.
Check the for sale area for a large tank for that bike.