The purse was made on a round loom. I'm told you can make scarves (either tubular ones, or just use the loom without closing the circle). There's a yahoo group that I joined for some more ideas, although I haven't had time to use them yet. It's called "loomroom." Someone on there was talking about making mittens, although I have no idea how you would accomplish this. I suspect there are all kinds of things you can do if you vary how many pegs you use and if you learn a handful of new stitches.
I hope she has fun with it - you should post pictures of her creations!
I'll have to post a few pictures of my hats...
Lisa