But I'm not a tax lawyer so there might be some loophole here that I'm not seeing.

Ah very interesting. Another reason to suspect that she didn't renounce - the expatriation tax. After renouncing she would have the same status as someone who never had citizenship. Not sure how she retains US "residence" without a green card, which she couldn't apply for until after renunciation.

Agree. Govt must prove case by "clear and convincing evidence." This is very different from the immigration context, in which courts are more deferential.