OP just another thought I had re you giving the diary to her cousin; I personally wouldn't do that. I think this could cause unwarranted resentment towards the cousin from your DD and at such a tender age could have her thinking "I'm the bad kid, my cousin is good". (which isn't true, her actions were bad yes, but I wouldn't involve the cousin to demonstrate this).
I absolutely agree with not allowing her to keep the diary and telling her the behaviour is unacceptable and perhaps taking something she cherishes away from her for a couple of weeks to show her how the little party girl is now missing out on the present intended for her so your DD can get a feel for how it feels to miss out on something.
Just my opinion though, I do see where you're coming from though.