not actually done one yet and hoping DD will sort hers whilst with friends at college. If you look on youtube for dance show reels you will find plenty of examples - good and bad. Its not that different to what you did for your DDs audition - showing different dance styles, including a clear close up and if using clips from shows, make sure your DD is clearly identifiable (that's where the some bad comes into it on youtube). Most for those who have not yet graduated are filmed in a studio.
From what I have seen - same music all the way through, cuts where DD is clearly visible - I have seen some that somehow highlight the dancer, others with a small arrow when they first appear and others with a few words appear at the bottom of screen saying position - those comments obviously only relevant to group scenes. Sent you pm. good luck with it. technical stuff like that is not my strength.
If its a dance reel I would say not. It really depends what this show reel is for. If you do a search on this forum you will find threads on more general show reels and perhaps examples for a child who acts, dances, sings. They have quite a different feel to the dance show reels produced by graduating and professional dancers and quite different again to those produced by MT graduates. I am in no way an expert - I've never done one - I am just going on people we know, what they have done etc.
I think that's a bit long to be honest ... you need to grab their attention in the first 30 seconds and they probably won't watch more than a couple of minutes!