Thanks for answering my questions, annaz.

I'd finish out Level 2 since she's still missing a few things and the passages do incrementally build on themselves. Dictation is a skill that builds upon itself each year, so fast forwarding usually isn't a good idea unless it is very obvious that a child is placed in an inappropriate level. If a child was absolutely acing it all every day, I'd consider starting him/her in Level 3 and seeing how that went, but otherwise, when a child is missing things in dictation, even if it's just a few words, it's usually an indicator he/she is appropriately placed and needs to continue to work on the skills in that level. However, those are just my thoughts, you will be able to make the best plan for your dd.
In Christ,
Julie