C.C.
Well, first of all -- smart kid, she knows how to pull down her pants.
First, I would make sure that she is not irritated in that area. Have you changed soap, diapers, etc that can cause redness, itchiness, etc.... Is there a certain time she does it? Maybe have her pediatrician look, if she hasnt gone to her regular check up.
If nothing, then yes, this is just a phase. Like everything else, she is exploring and learning. I agree with the first 2 moms, that you do have to protect her, but I hope the reactions she gets do not leave a negative impression on her as they are very sensitive to how we, as parents, react. You eventually want her to be potty trained and you dont want her to associate "bad" with that area.
I really like the overall idea. Hope everything works out.