What I've generally found is that anything you can do to lock down a device, can just as easily be undone by the person it's meant to lock down. If they don't have the expertise themselves, they will find someone who will.
That said, I have little faith in nanny software. Wiping and restoring is a pretty trivial thing, and so it won't be one bit hard to get rid of any monitoring/blocking software once it's discovered (and it will be).
It's possible to use private browsing in Safari which deletes all user-visible history, and she can use other wifi hotspots to do what she wants. For that very reason, "nanny software" seems to be the only way to go in order to implement this kind of surveillance. The monitoring software can continuously send the information to a 3rd-party-server so that it won't be wiped out by the user, and alert the parents if anyone attempts to delete the monitoring software (more commonly known as "spyware") or by other means tamper with it.
Under such circumstances, I wouldn't let my kid have an iPod touch at all.
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