I doubt you would need an extended warranty, but you never know. I got the dreaded "ERR99" that happened on some of the Canon's which rendered my camera useless after a couple of years shooting. I dropped by Best Buy with my extended warranty in hand and they just handed me a brand new camera off the shelf. I needed it but most will not. On that note, I would NOT buy from the link you posted. Look at the feedback about that store: http://www.resellerratings.com/store/Broadway_Photo
B&H Photo Video (www.bhphotovideo.com
) is where most people buy their equipment if they are going to buy online. They have great prices and extraordinary service.
I would say go for it if you can still find the XT from a reliable shop unless you want to go newer. That is the 2nd generation of the camera, and the 4th generation is arleady out called the XSI. I would probably look at it or go with the 3rd generation (XTI) which you should also be able to get for a really good price right now. The XTI has a larger LCD screen, more pixels, and some other nice features that do not exist on the XT.
All that being said I think you should go for it! I had never really taken a picture in my life when I got my Digital Rebel. It was WAY, WAY too much camera for me, but I have really grown to love photography and use my camera to more of it's full potential over the last 4.5 years. I would also look at buying her something like the book "Understand Exposure". Just handing somebody a DSLR can be overwhelming if they don't have a starting point. www.dpreview.com
can also become your best friend. They have a glossary of all the photography terms and also have dedicated forums for just about every DSLR out there.
Good luck! Let her shoot with the kit lens for a while before you start throwing down money on lenses. After some time she'll better understand what type of lenses she will need.
Here are some pictures I took in Europe last year with the DR. Lots of people take much better pictures than me, but this should at least show you what is capable for a generic phototog like myself with the Canon DR! http://www.pbase.com/eubanks01/europe