It sounds like the teacher was so motivated to get the best possible team by getting the largest number of kids to try out, that the idea of rejection and feelings never entered the process. Sometimes the desire to win competitions really makes adults insensitive to kids.
I think your only option is to use it as a teaching moment about finding who you are, trying things, experimenting, etc., and about learning some things about what motivates certain coaches. I'm not sure how old your daughter is, but you might put on the original "Karate Kid" movie - show her the bad karate instructor for the other school who didn't care who got hurt when he worked so hard to have his team be the best. There are a lot of bad coaches out there. Another good picture is "Rudy" - young guy doesn't make the team, but doesn't give up. He becomes admirable despite his lack of natural ability.
Kids also learn from disappointment. They are too young to have to make these "all or nothing" decisions, and this is a good way to learn about being pushed, about being urged to pursue one avenue when it might not be right for them.
My son was never interested in one particular thing - I had to fight the parental peer pressure to choose between hockey and soccer and basketball and karate, or (worse) having karate 3 days a week and basketball the other 2). "How is he going to get into college if he doesn't become a top performer?" Yikes!
I never wanted him in something every single day, and I never wanted him to be pressured into "specializing" at age 8 or 10 or whatever. He tried a few different things - soccer a couple of seasons, town rec department basketball, etc. But not something every single day. He had friends and play dates too. If he had truly loved one sport above all others, that would have been different. But he was a generalist.
In high school, he wanted to try out for basketball but realized only a few people could make that team. He meandered over to the track and field team, which accepted everyone who wanted to participate. There were dedicated runners and javelin throwers, and then there were kids who just wanted to participate, to be in shape, or to condition for a sport that didn't play during that season.
He was encouraged by the coach to try a number of things. The coach looked at his size and abilities, but also recognized that kids' bodies change a lot in high school over a period of 4 years! Freshman year is "experiment year" and then the kids can try a few things and get a little coaching in different areas. Sophomore year, they start to specialize. My son discovered the joy of distance running, the challenge of competing against himself and the clock (not so much other people), and just LOVED the experience. He became very strong at long distances, and guess what? He got into a great college because of his running but also because he had time to do other things. Colleges want well-rounded kids who enjoy a variety of activities, related well to different kids and adults, and can adapt. So don't let your daughter get sucked into the hard core competitive thing or feel the need to decide now what her chosen sport will be. Her likes, dislikes, strengths, interests and body will change a lot over the years. Encourage her to experiment.
I wouldn't take on the teacher unless they ask or contact her for a call-back. If asked, I'd definitely say outright that she felt misled by the hype and wasn't prepared for the devastation of being pushed for something that required her to be an expert on so many pieces of equipment. Say you're not comfortable with that level of competitiveness and you won't be back now will you recommend them to others. If you aren't comfortable saying anything, you can always write a letter to the director, when you have a chance to choose your words. Be business-like rather than vindictive and emotional. If they get the message, great. If they don't, your daughter will know that it's "the system" and not her, that you backed her up, and that she will be able to judge future situations by the "odds" of being selected and how hard she wants to work. She'll also be much more empathetic with all the other kids who are disappointed when they don't make teams.
Growth experience for all.