It's not the representation of the image that's the problem, she has been using the words MINI, Mini and Clubman - which are Trademarks. You can clearly see on her website that her solicitor has told her to say the following :
BMW are the registered proprietors of numerous UK and Community trade marks associated with the Mini including the word marks MINI, MINI COOPER and CLUBMAN. They also own other trade marks including the words RILEY and in addition have registered designs for the shape of the BMW Mini and separately for a toy (model) and a rucksack. The shape of the original Mini (in both 2 and 3 dimensions) is also registered as a BMW trade mark and is licensed for use by them.
No amount of arguing will change those facts, she made a nice product, and it appealed to people, but she made a product, that apart from the colour changes, was identical to MINIs own plush toy, and used the words MINI, Mini and Clubman to describe them. It also has nothing to do with her product affecting MINI's sales. This is an intellectual property issue, one which she infringed.
I've a couple of hypothetical questions for you - If I was to comission an artist to paint a picture of my car (MINI or Mini) would that be an infringement of BMW's trademark? I would be paying someone to create a 2D representaion of a shape which BMW legally own the copyright of. Would it apply to photographs? If I employ a professional photographer to take pictures of the same copyrighted shape is that an infringment?
No it isn't. The creative commons artistic license which most Painters and Photographers use (The license I use for my artwork), allows you to photography, or paint anything in the public domain. It does not allow for you to create a product, copying another company's product, using their trademarked name, and sell medium quantities. The CCAL only allows for small numbers of reproductions to be sold, and as long as you clearly state that it isn't a work by the original owner of the property you're representing.
This has been debated ad nauseum on many MINI and Mini forums. The bottom line is she broke all the rules, she had a great product, and to be honest, I'd have probably bought one too if I'd seen it earlier, but it still doesn't excuse ignorance of copyright, and trademark law.