I wouldn't count it against her.
I have a straight A student. She even carried a 100 in one of her (academic) subjects in 3rd grade, and a FEW 99's every year. And she LOVES PE and sports and is good at them, too. She has zero disciplinary issues at school. They have zero written work in PE (rules about how to play games), and zero physical markers (doing x number of sit-ups), or anything at all measurable... it is all participation type stuff---or-- something. I really don't know WHAT they based the grade off of, since there was NO written or oral testing of any kind, or fitness requirements. She received a 99 in PE every 9 weeks all year.
Why? Her teacher TOLD her, "I don't give 100's".
Ummm... well, that's pretty subjective, don't ya think? Of course, no person can always give 100% every day all the time. Isn't possible. And I get that, but it seems so arbitrary. Why not set up some sort of parameter that allows the kids to meet requirements that can be measured. Participation: 75% of the grade. If they participate they get the points. Etc.
I just feel like, especially in elementary, that to tell them: no matter what you do, you won't get a 100, can have a LOT of negative effects. What is the point of that, exactly?
I'd ignore the PE grade. If they did not give your daughter specific, tangible guidelines or requirements to meet, that can be measured objectively, then it is purely a subjective grade. Whether it is a C or an A.
Don't count it. Reward her for her hard work in the academic areas!