D.K.
I'd say the party is a lot of work so sewing would not be reasonable. If your pretty, pretty princess won't cave on wearing her own beautiful dress, maybe you could tell her, fine we'll get the dress but it'll be your birhtday present from dad and me. Then she can decide if it's worth being her only present or maybe that other dress might be pretty after all. :) Or if she REALLY wants the dress, she'll be happy to get it as her gift. I find that if my kids really want something, when I spell out that it'd be their whole gift or most of it, they either decide it's too much (their own terms of too much because they have no concept of money!) or say it's worth it. Sometimes you don't know which way they'll go. lol. If you can get her to explain why she doesn't like her own dress, maybe because it lacks bling, you might go get a thing of heat-fix crystals (hobby lobby or Joann's will have them) then let her do a design she likes & you iron them, that might solve the problem a lot easier and you both win.
Only you can decide if she's being unreasonable in demanding a new dress. I tend to think if it was me I'd tell her either wear her own beautiful dress or her birthday suit lol. But then I'm a mean mom! lol.
Good luck!
D.