Hi BadNews,
You sound like a very nice person!! Some people would be like, "oh well, at least I made the cut." So the fact that you are taking her feelings into account is very empathic and compassionate of you. It's really nothing to feel guilty about. Though, I understand feeling guilty, at the same time.
I don't see anything wrong with telling her what you told us here, that you're not sure what to say, but feel, badly that she didn't get an interview, and to keep going because you know she has immense promise and can do things very well because you've seen her do it.
Will there be other opportunities for her?