I don't thnk she is a clear
TN candidate, so I guess she will need to have an employer sponsor her April 1 '08 for a possible H-1B in October?
I wonder if H-1Bs will still be in short supply.
Probably, the H-1B system has turned into a lottery.
As for me, If I wanted to make this a longer-term thing at some point in the future, would it be better to follow TN --> adjustment of status (consular processing),
Adjustment of status and consular processing are two different things.
or TN --> H-1B --> adjustment of status?
Just stay on the TN and file for consular processing, not adjustment. There is no need for a Canadian TN to transfer to H-1b. And again, even if you file an H-1B it may be rejected because of the virtual lottery system.