This is tough. I think many of us have been in your shoes, or have been on teams where this has been considered or done.
As you mentioned, you have to think about your daughters needs. Could you serve her better by being an assistant on another team or possibly just a parent helper? The answer is probably "yes".
I think you have already answered your question but if there are five girls on your team that are travel ball quality and the rest are not, then you are in for some frustrating seasons. Are those five growing as much as they can on your team? Probably not. Does that matter to them and their parents? Maybe or maybe not, depends on the kids and parents.
Having tryouts assumes you are going to tell the other girls they are not on the team anymore (potentially). Are you prepared to do that?
Here is what I suggest... Find another team that has a small core group of players and ask that coach if they would like to consolidate. If so then you have tryouts and you are assured of having enough there to make the team.