Where is Lakeview? Is it in Kansas?
But since you asked, I'll give you my opinion-it's the internet, after all!
1) With the ATI tests, different schools incorporate these in different ways. At my school, for example, we had to have 90% or better to pass our classes--but we had multiple opportunities to retake a similar test until we could pass. It was not factored into our grade at all--but at the same time, you could have straight As, and then not be able to get a 90% and therefore flunk out of the program. A school my friend went to required a 60% or better to pass, with no retakes. The ATI *was* factored into their grade, but was not a huge percentage (something like 15%).
Each school is different. The school can set up their grading system how they want. If your information is correct, it sounds like the school is using ATI as their sole means of testing, instead of using their own tests as well. I personally think that sounds a bit lazy on the school's part. But as far as is it ethical? They can grade however they want. My school grade was based pretty much 100% on our tests. What difference is it whether it was ATI or the instructor's own written test? She might have the advantage of a better written test (you should see some of the questions some instructors come up with...), but the disadvantage is that the administrators of the test are not the ones teaching the material, and so there might be a concern regarding whether the instructors would be appropriately preparing the students for the tests. I don't know what kind of teaching materials ATI provides, so I'm not sure how instructors would know what material to cover. I do know we received very comprehensive books with our ATI materials, and I did use the ATI materials extensively as a study supplement, once I got used to them. I was impressed with the quality of most of their materials.
2) This is your daughter's issue, not yours. She is an adult now, in a very demanding program. She is going to have to figure this out for herself. If she has questions about the ethics of the program, the way her grade is figured, or the material over which she is being tested, then she needs to discuss this with her instructors and program director. It is not your place to do this. The umbilical cord must be cut.
I understand that you are probably not trying to be overbearing, and that you are probably here to just gather a little information so you can be supportive. I just wanted to point out that, once your daughter graduates from school, she will be responsible for people's lives. Pretty heady stuff. You won't be there to help her with that, either. So it's good for her now to have some challenges and stress that she learns to handle on her own, before someone else's life hangs in the balance. Not that your role as guide and support ends when your child turns 18; but it definitely changes. It's a hard transition.
If I were you, I'd just ask open ended questions about school in general, in a very benign manner. If she wants to talk to you about it, that will give her the opportunity; but if she doesn't want to talk to you about it, you won't come across as nagging and overbearing. She certainly should be able to vent to you, to bounce ideas off of you, and to expect general encouragement from you. But as far as advocacy or action from you; that's something she needs to do herself. There are great student forums here. Why don't you encourage her to get a profile and seek support and information here? http://allnurses.com/forums/f196/
Good luck to her, and to you, too. My oldest will be out on her own in a couple of years. It's so tough to know when to help and when to sit back. I'm still trying to figure it out, and I imagine I will be bumbling about quite a bit over the next decade or so.