A couple things...
Are you the Coach of this team? If not, then i'm a little confused about your inquiry as to who should be on the team.
Good ball players with 99/98 birth dates should have NO problem competing at 16u regionally (meaning playing 16u tournaments in your state). A second year team that is solid should be playing up- the game is faster.
I don't think that most 98/99 birthday kids can successfully playing Top Level 16u such as Boulder, Demarini Invite/ Sparks Showcase. Some can, most cannot.
As far as what YOU should do for your daughter, my thoughts are to have YOUR daughter play with a group of kids and for a team that will challenge her. How would you personally rate your kid compared to her teammates? Is she one of the top players? Is she the #1 pitcher/catcher? Does she lead the team in BA? Some parents like it when their kids are the star but others recognize the importance of having teammates and Coaches that PUSH your daughter to up her game. To quote Bill Conroy:
As far as playing time, everyone wants to play all the time and yes I carried a roster of 16 players at Boulder and PGF Nationals but I believe in competition and so do the players that play for me, the better you play , the more you'll play.
Nothing is handed to you in life, you need to compete for everything, you need to earn what you receive. I may be old school and quickly becoming a dinosaur in the way I do things but it works for me and the Beverly Bandits.