Thanks all. OP here. In the end, she decided she just wanted to take her name off their list.
Before she notified them, we talked about the possibility that their offer would be better than the scholarship she got at the school she had planned to attend (which I think was unlikely). She said that even if that came to pass, she would still choose the school we had paid a deposit on. I respected her choice.
This is the risk the schools run with this "game"...though I understand they have a hard job in terms of estimating yields. We would have seriously considered this school if she had been admitted regular decision (i.e., we would have attended admitted students day, etc), but by the time the Wait List decision came in...that train had left the station.
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