It has nothing to do with the length of her arms.
Just tell who ever made that P&S that it is defective. Your sister in law won't need to hold it at arm's length if it has a 22 inch wide screen monitor.
(ps, she won't be able to lift it either but that is a different case)
It's to bad that people have not been able to fugure out how to project an image with a flat screen so that it appears in focus to your eyes
As an after thought. It's too bad you didn't have a really wide lens for that shot. I'm thinking specifically about daacon's 10-17mm fish eye. But then again, she is probably not too pleased about the shot as it is now. If you used a fish eye she would probably kill you.