A.M.
Just to clarify, are you suggesting that they reward mediocrity but only give the exceptional students a pat on the back? If that were the case, why would anyone in this world work hard to be exceptional?
Just playing devil's advocate here... And I am not suggesting that your daughter is only average... But the AR program is a nationwide program with individual goals set to be attainable. The majority of students do reach their goal. I was a teacher, I do understand.
If you know that your daughter gave it her all, than that is your place, as her parent, to reward her and make her feel special. There will always be some reward or special privilege that she sees other kids getting that she can't have for whatever reason. This will not be the first or the last time.
If you were to make a fuss to the principal, the result would probably be that she didn't offer that reward ever again. It is just too costly to provide ice cream to practically the entire school. Schools are poorly funded as is. (and there is a chance that the principal paid for that out of her own pocket... wouldn't be the first time.)
I commend you for asking these wonderful mamas before jumping in. I know that it is tough when your child is disappointed. Maybe you should discuss what the criteria is for earning that reward and make an action plan of how to obtain that for next year. Use it as a learning experience.
Good luck in whatever you choose.
A.