C.N.
Children that age are more accepting of kids who are diferent than you think. A friend of mine has a child with a genetic skin disorder that requires her arms and legs to be constantly wrapped in bandages to prevent injury. Wen she starts a new school, he explains her condition to her teachers, and kids ask her why she has those bandages, she tells them, and it's all good.
As for damaging her mentally, there's no reason it should, nor is there any reason fo her to fel guilty about it. I certainly wouldn't tell her "We have to do this because you walked on tiptoe when you were a baby and damaged your feet." That would make her feel as though she had done somethng wrong. I'd simply tell her "Your feet don't want to work in the right direction, and this will teach them how." There's no reason to go into med school physiological detail as to why. If she asks why, just tell her that sometimes parts of people's bodies need help learning to work properly. At five, that's probably about all the explanation she can digest.