I can understand your concern. I am a mother of 3 children (one who is 9 years old and has been receiving speech therapy since 4 years of age) and a school-based speech language pathologist with over 13 years school-based experience, and more in private practice. Please realize that a child receiving "speech" can be receiving therapy for anything from stuttering, articulation (speech sound errors), voice disorders or language. While the first 3 areas should not impact her progress to the point where retetion is recommended, the last area, language, can definitely impact her ability to progress academically to the point where repeating a grade might be in the child's best interest. Language delays and disorders can impact reading readiness skills such as rhyming, phonetic and phonemic awareness, and vocabulary development. If she can already decode words (sound out the individual sounds represented by letters and blend them into words), delays in language can impact her ability to comprehend what she is reading. Furthermore, language delays and disorders can also impact her ability to understand/learn math concepts, form answers to questions so that she can show what she does understand, follow multi-step directions in a classroom, and interact effectively and appropriately with peers and/or adults, just to name a few things. While no one wants their child to repeat a grade or have difficulties in school, sometimes that repetition is just what the child needs to catch up on skills they need to form a strong foundation from which to build further knowledge. The fact that they have moved 3 times in the past year may have caused some of those gaps in knowledge. Placing your grandaughter in first grade then moving her down to SK if she needs it would probably be more detrimental and traumatic than having her start in SK over again. The opposite may be a possibility, where she starts in SK and then maybe moves up to 1st grade. Also, being the best in her class as opposed to being the one always struggling can boost her self-confidence.
My advice to you is, work with her hard over this summer, see how she progresses. If you can get additional speech therapy sessions for the summer, do that. If they recommended any form of summer school, take it! You can request that she be tested during pre-planning at the beginning of the school year or have her tested privately to show documentation of academic level/growth, to see if she's caught up with the extra help over the summer and then they can recommend placement into first grade. I've had a couple of cases where the child was recommended for retetion, but received extra help over the summer and was promoted to the next grade with the rest of her classmates. Take all that I've said into concideration. I don't know where she lives, but be assured that recommendations for retetion are not taken lightly by any school personnel and are usually only done if it will benefit the child.