For the record - I have the Ipod touch and the bose sound dock portable. They work perfectly together and the remote works - The key is to set up a few great playlists and let her rip for hours of great tunes from a great set of speakers.
It does work with the Touch. I've been having trouble with the battery... not fully diagnosed yet. The Soundock battery seems to only last less than 2 hours at best and seems to degrade over time after charging. The Soundock also seems to discharge the iPod Touch battery if left connected. The Soundock does sound GREAT for its size. BTW, I think the remote is stupid... would prefer controls on the Soundock.