It is strange and over the top, I agree. My nanny is stunning, but I only tell her she looks pretty when she sends me pictures of herself dolled up for a wedding or something. Complimenting someone on LOOKING pretty (my nanny in a gorgeous dress at a wedding) is a different and less intimate comment than just randomly saying "you're so pretty." She is gorgeous, but comes in sweats most days, which is appropriate for sitting on the ground with my toddler all day, and it would feel a little creepy to complement on her looks on normal work days.

She is probably insecure that you are prettier (and younger?) than her.

Maybe she can't think of a different positive adjective to describe you.