I would tell her that you just want to make sure that she's ready for first grade. Also, you might tell her that she learns differently than some other kids and that sometimes it takes her longer to learn than others, so you and the school want to make sure that she is learning everything well, so that she can succeed. Also, I do hope she gets a different teacher UNLESS this one has been really good. And, I hope that you are taking advantage of the additional help you should be able to get from the school district since she has been diagnosed with a learning disorder (if that isn't the case, you really should take advantage of the testing they provide).
It really depends upon her relationship with the other kids as to how important the graduation might be. Honestly, at this age, the social aspect of school is equally as important as the learning. If she has friends, then I see nothing wrong with letting her participate. Indeed, it might even help to encourage her to get a nice photo of her and put that somewhere in the house, telling her how proud you are of her efforts in school this year. I think that trying to avoid the situation has the potential to cause more harm than to help the situation. Also, it might just be re-assuring to her to know what will be happening again next year. In my experience, if you handle the situation in a positive manner, it will positively impact her. If you in any way make her feel that something is wrong with her, then she will begin to believe that - which is why I think going to the graduation is a good idea.