Often1 actually you are incorrect. Here are the reqs taken out of TIMATIC(what AA checks then checking folks in):
Canada - Destination Passport

Passport required.

Travel without passport is possible for:

Nationals of the USA with a recommended proof of citizenship such as a:
- US birth certificate; or
- US certificate of citizenship; or
- US certificate of naturalization.

Document validity rules:

Passports and other documents accepted for entry must be valid for the period of intended stay.

Warning: if departing from the USA (regardless of any destination passport exemptions), a valid passport and/or accepted departure document is required by the US immigration authorities.

Additional information:

Holders of proof of citizenship issued by USA not holding a valid passport; will be granted entry upon arrival only after examination by a Canadian Border Services Officer if having satisfied the officer about their citizenship.

So there we have it. It will be 100% fine as this is what the above says. She will have to go through a secondary in YYZ but we will be totally fine with that!