If she can ride on the balance bike, then not much to worry about.

I would definitely go for a bigger frame. She will outgrow smaller frame in a matter of 1-2 months, and you will need to buy another one. Also, what I have noticed that riding bigger-frame bike is easier for kids, as pedals are a bit longer; this makes it easier to push pedals and keep the balance in the same time.

Smaller bike is not necessarily easier for her.