Everyone's journey is a bit different and you will get a lot of varying opinions. How does your daughter feel about the move to Level 2 - is she excited? What are her hopes at this point for her gymnastics? What prompted the switch between programs? I would let those questions guide you in this. If she is happy and this is what she wants, then great!
As for our experience --- Our gym does not have a level 2 - that would be closer to our pre-team group. Most of the kids in that group are 5-6 years old. We start competing at Level 3 at our gym and the girls do tend to be on the young side, but not always. When DD started level 3 there was a group of older girls in there too... some of them are still on the team and have moved up the levels with DD throughout the years. DD's level 7 team this year had 10 year olds (DD's age) up to age 13 (8th grade). That age gap seemed to be much greater when she was 5/6 starting out than it does now. And those 'older' girls, have continued to progress and are talented, committed, happy gymnasts as well. We have also had girls who are a bit older start in Xcel program and make the switch to JO and be very successful; they just didn't get a super early start in the sport. One of our level 8 girls has only been in gymnastics for 3 years; she is 12 and is incredible. Don't let the age stuff discourage you at this point.