I'm just at your limit at 5'0" here. I have 2 44cm 700c wheel bikes and one 47cm 650c wheel bike. I have had to go with shorter stems on all of my bikes. Even at my height I think I've got longer legs and a very short torso and arms so I really need to go small with my frames.
If there is any place near that your friend could try a Fuji? That is the bike with the shortest TT that I've found and can possibly be found with the better components and price range your friend is looking for. They actually have some inbetween models in addition to their top of the line which is nice. Performance sells them, if there is one in your area, and they will order the right size for her to try without obligating her to buy the bike.
Another woman on my team, who I think may be even shorter than I am, has one of the 43cm Treks. She did put a super short stem on it - she's got a 60mm stem(she's looking for a 70 - I have a 90 on my Fuji and 80s on my other bikes)!
A lot of people balk at putting very short stems on bikes, they say it affects the handling, but my bike fitter told me that it was OK- that a shorter stem would still be proportional with my little bike and I haven't had any trouble with any of my bikes feeling twitchy.
It can be hard to find really little frames, I know I went through it a few years ago, but more manufacuters are making small bikes in more models these days so there is hope. When you look around on the internet and compare frame geometries, one of the more important measurements for us folks with short torso/arms you'll want to look at is the effective top tube. The smaller that number the shorter the reach.
*Edit* - I've done a little checking and it looks like this year's Fuji models have longer top tubes than the one I got in 04" - that's a bit dissapointing.



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