Several questions need to be considered here, J.. How big is the venue? Do you get a certain amount of tickets because only so many can fit? Or is it a big place and anyone can come?
If it is by ticket-only invitation, that's easier. You and she decide together who should be invited. Not just because she likes them better, but by also who is important. Her grandparents trump her cousins. Her siblings trump her girlfriend. That kind of thing. Then you can tell everyone else how sorry you are that there is so little room, you are sure they will understand, yada yada. Most people really do understand this.
If the venue is huge and anyone can show up, then your daughter needs a reality check (sorry). She will be lucky that people will want to come sit through several hours of names being called out. She thinks that the whole family who are calling will really come, but push comes to shove, they probably won't. And if they do? So what! They will be sitting up there and will clap for her when she takes that diploma in hand, and afterwards she will hug them and say goodbye.
AND, they will give her gifts. Kids have no idea how wonderful it is to get an envelope with a check in it until all of a sudden, here come the envelopes. They DON'T get this, J. until they experience it. However, you are the experienced and wise mother. You need to tell her what's what. She makes a stink over people coming when there is no ticket restriction, and she will kiss a bunch of cards goodbye. Even when only a card, and not a check, comes in the mail, it lets a graduate know just how special and important finishing school really is. It helps them grow up.
And it is also nice that this family, who hasn't seen her since she was 2, is actually noticing and acknowledging. You don't want to hurt feelings - so don't! Forget your conflict and tell your daughter that sometimes we suck it up and act like a grown-up because it's the right thing to do. It costs us so little, and can gain so much. She will enjoy her day a great deal - she can say hi, and hug, and thanks so much for making the trip, and then go off with her friends.
Have you ordered the announcements yet? If it's a ticketed event, just don't put the venue on the announcement. If it is an open event, send out as many announcements as you can. It truly doesn't matter if they show up or not. But that announcement is a request for a gift, really and truly.
This is my suggestion. Your daughter will need to learn how to make nice with all kinds of people whether she knows them or not. If she would like to start now, she will make them happy and make herself happy.
Good luck, and congratulations for having a graduate in the family!
Dawn