I was looking into that camera as well before I bought my Dig Rebel (300D) I liked the fact that it was 8 MP, and I've heard that Olympus is a pretty respectable company. But I do not regret buying a Canon by any means. The XT has the same ammount of MP as the Olympus but with the Canon there are so many options for lenses flashes and other things. I don't tink Olympus stands a chance in that department. The only downer about the XT (to me) is it's size. Just make sure that she can hold it easily without any problems. Oh, and I believe the sensor on the Olympus is a 2.0 crop while the XT is a 1.6 crop. So it will be easier to get telephoto with the olympus, but damn near impossible to get a really wide angle.
With that being said, I'd go with the Canon. No contest.