Hi L. - wow I feel your pain. Our daughter, Kendall, turns 3 next week. This week she has successfully used the potty at home and at school every day and while she has had a few minor accidents, she is "ready". I say this because I have been in angst over this for a while, lots of wishful thinking on my part, and it just seemed to click for her right now. She was in the stage where she wanted to wear princess pants, but only over pull ups, and when she was in cotton training pants, she was devastated when she had an accident. Then it just clicked. My husband says I am the pee whisperer - a bit of frustration on his part as he was tending to get upset instead of being calm about it, but he is getting with it too. I think what has finally worked is that Kendall says she is ready, she has made the decision and she definitely knows she wants to do it.
Don't be too hard on yourself, and Bailey sounds like a very bright young girl - she will put the pieces together soon and in the meantime, I suggest you might try the heavier weight cotton pants, with the princess ones over them - at least it is a bit easier to clean up and while she recognizes she had an accident, maybe it will click for Bailey to next time run to the bathroom. Also, a great bit of advice from the moms on here, don't use pull ups - as scary as that is, it is an easy out for the kids to not recognize the need to pee or poop. I took a deep breath on that one - but the funny thing was Kendall told me she didn't like the pull ups and she didn't want to wear them! Ha - that was shocker!
Best of luck - sorry for the rambling but I am cheering you and Bailey on! :)