I try to teach my 27 month old son empathy as well as affection. One technique I use is when he does something that might be hurting another, I say "Oh poor ______, I think that hurts him/her", or "Be gentle, people are very delicate", or even "Ouch! _____ doesn't like it when you _______ like that. Try it like this. (And when they do it right) Good job!" This is great to use with dolls because then he gets the message often and more frequently in a safer, less stressful setting. In my opinion, it is better to have them be more considerate of others' feelings and a little less outwardly affectionate, than super-affectionate but clueless as to what the other is experiencing. The first skill will fare them better in life socially, and make them happier and more well-liked in the long run.
Personally, I am happy with other kids hugging my child as long as it is not forceful, hurtful, or clearly unwanted by my son (and also as long as they are not currently carrying the latest plague!) :-) But affection among other kids and my son is generally a very positive thing for me to see, especially when it is mutual.
And one last thing -- maybe try giving her tons of gentle, loving hugs (overloading her even!) and kisses, and see if her obsession with them with others doesn't taper off a little? That might be something worth trying...