I don't understand #2, but it smells funny.
Is she going to legitimately sell to a family member for full price? That's fine. Then the family member sells the house, and might have a small gain or small loss. But the family member won't get any exclusion, and will probably have significant closing costs. If it would not be a legitimate sale at full price, that sounds like a legal problem down the road.
There's no reason to be afraid of taxes, it's just one factor of many. Since her basis is at least $550,000, the difference between selling before or after 3/1/25 is, at most, $10,000 of capital gains taxes. If she really doesn't want to pay any tax, drop the price, get a faster sale, and take less profit. (But why drop the price $50,000 in order to save $10,000?)
And don't forget the basis adjustments from improvements and selling expenses.
