Hi D.:
My son, Ethan, is now almost 3-years old. He too was diagnosed with Dairy allergy when he was about 6-months old. I have two older kids so the toughest part has been keeping him away from the older kids food (cereal with milk left out on the kitchen counter was always a problem). By about 2-years old he was surprisingly good at asking if it was okay for him to eat something, and he had a pretty good idea of what foods to stay away from. When something has dairy in it we tell him he can't have it because it will make him itchy. He understands this because he doesn't like the feeling he has when he breaks out in hives, so he (for the most part) chooses to stay away from foods if he knows they will make him feel itchy. Now at almost 3-years old he doesn't often get into foods he isn't allowed to have (although last week he drank some protien shake that was out on the counter at my sister's house, we were so surprised that he didn't ask first until we realized it was in a soda-like can...at home he knows soda won't make him sick, but he usually isn't allowed to have it because it's normally dad's Coke, so of course he was sneaking a sip of what he though was soda).
During the 10-months - 2-years stage it was very hard to keep Ethan safe from the foods that caused a reaction. It seemed he got into something once or twice a week (he was/is a very busy and curious kid who can climb well and get into high cabinets if he so chooses). Thankfully we never had to use the Epi-Pen, Benedryl always did the trick. However, one time in the begining we did have to take him to the ER--my son and his friend were having cheese quesadillas for lunch and I didn't realize that my son's friend didn't want the rest of his lunch so he put it on Ethan's high chair tray. A few hours later Ethan was red and swollen from his torso all the way up to his eyes. It was really scary, and I didn't feel like the Benedryl was kicking in fast enough, and I hadn't yet filled the prescription for the Epi-Pen. The doctor told us to call an ambulance and get him to the ER just in case his airway became swollen. Thankfully he was just fine, and after that experience I learned to give him Benedryl at even just the slightest evidence of a reaction (I'd seen a single hive on him earlier that day but dismissed it as a skin irritation not knowing he'd eaten the quesadilla until later).
My best advice is to focus on what foods your child CAN have, rather than focus on what she can't. My child is also allergic to eggs, so sometimes it seems our choices are really limited. But when we focus on what he CAN have, we realize there are a lot of options.
He is fine with Smart Balance margarine which has a small amount of whey, but he's been okay with it. Most margarine I've found does have small amounts of whey. Finding a margarine was great so that he could have some backed goods. For your daughter's 1-year old birthday cake you can try a Cherrybrook Farms cake mix or you can make a Whacky Cake from scratch (I can send you the recipe or you can find the recipe on Recipes.com or cooks.com). Neither have eggs or dairy. Some store bought frostings don't have dairy either, read ingredients because they vary.
As of last year Ethan was still allergic, I haven't had him re-tested this year to see if his RAST levels have come down. I'd ask your child's allergist to do RAST test (requires a blood draw) so you can compare the levels year to year. This will give you an idea if your child is growing out of the allergy.
My child is now in 1-day a week preschool and is in the nursery at church on Sundays. They don't allow snacks with dairy or egg in either classroom (except for birthday treats). This makes it easier on the teachers. I could bring Ethan his own snacks, but then the other kids may want what he has or he may want what the other kids have. It's just easier on everyone if all the kids have the same snack. I'm sure other parents might find it a hassel to have to consider the allergies in the class when bringing snacks, but I think it's much easier on the teachers. I've provided a list of dairy-free egg-free snacks for both classes so the parents have ideas of what works. I'd be happy to email you my list.
The first year and a half is the most difficult, once your child starts to understand that they need to stay away from certain foods the allergy becomes much easier to manage.
I'm still hoping Ethan will grow out of it. Originally my allergist said about 80% of kids grow out of it by 5-years old, but recently I read an article saying the numbers were getting lower and only about 50% were growing out of the allergy! We're keeping our fingers crossed. And if not, then I'll just continue to count my blessings that we don't have a scary peanut allergy!
Good luck to you,
Michelle