She is entitled to 75% of the fare of the downgraded leg under the UK261 legislation.So if she paid 100k points she would be reimbursed 75k as the compensation. Plus part of the cash element as well

Yes the UC offer is a valid one. I'm not fully cognisent of the details but I'm sure some one who is will be along shortly,

Don't make a decsion until you are sure which you want as you can't go back later and change your mind. and IIRC these vouchers do have a 'use by' date where as points don't expire.

If she accepts it it superceeds the UK261 fare reimbursement. Airlines are allowed to offer vouchers like this as an alternative but it's the passengers chouse which they accept.

I'm afraid last minute down grades do happen whenere there is something like a plane swap due to mechanical issues and the replacement plane has fewer seats and yes it is very frustrating