I don't see a reason to punish her at all. The worst that you could ask her to do is discuss her next experiments with her teachers beforehand. Some of them could indeed be dangerous and harm somebody, and she would learn more if she is given some hints on what she's doing. Apart from that, experimenting and learning should be encouraged, not discouraged. Whether she is doing it for fun or to learn, good for her. Some supervision is the only thing that seemed to be missing here, and she should be advised about it, although I think she learnt that part herself, and everything else would be an overreaction.
Treating this as something akin to terrorism certainly deserves an award for most ridiculous and laughable reaction. And shouldn't a destructive device be capable of, you know, destructing things? From the description, me sitting on things is more destructive.
I really think she should have done the experiment in her own yard rather than at school. She had no real reason to do it at school and I think the school has every right to forbid private experiments on school grounds. Because she had a good behaviour record I also think expelling her is wrong.
I guess I am a bit more wary than you. Many years ago a boy did an experiment in a school in Hobart and manage not only to blow up his classroom but blow his own hand off as well. It was fortunate that he was the only child in the classroom (some other children walking by outside received minor cuts from flying glass from the windows).