CS: She isn’t doing Chessed because she isn’t tznius- her Chessed is an expression of her Neshama…
The point being discussed in this story is not the way you should feel about the woman, it’s the way you’re being mechanech your kids. When an adult sees someone not-tzniusidk doing some great chesed – or a similar scenario – he can look at the good on its own. But your daughter doesn’t work that way. She sees everything, and as much as you may want to think that she thinks like you, and is discerning, she is much more impressionable. Any comment you make that could be taken by your daughter as condoning the non-tznius – even though you certainly have no intention of condoning it – may be taken by her as condoning it.
That’s why you have to ALWAYS be negative about the aspect you don’t want your daughter to accept. In decades of dealing with young people I have seen many people go completely off R”L, and many go partly off – some of them relatives, unfortunately – and it is nearly always because of parents/family expressing the “good side” of the person who is not frum.