ftp is not secure, the password have traveled without encryption over the net, so first thing first :
- change admin/root password
- change her password.
Then I would suggest to rather use sftp or scp (ie over ssh). Configure her a rsa key with passphrase, this is the way to go secure.
Currently we do not have out of the box way to chroot her to the ibay you want, so she still will have the need to "cd /home/e-smith/ibays/youribay/html". I have some POC around to make a contribs, but not finished.
The remote access contrib chroot works only for ftp.
The best approach is as suggested Stefano to do this on a specific ibay, but if you want to really use Primary, then you will need to change the default ownership in the db to have the ibay owned by a group you can add your designer. Anyway, if this is dev purpose and your site is live on the Primary, you better have her to work on the copy on a nother ibay and move it later.