I think, if 'she' refers to 'Toni', then it's correct. 'so' in your sentence is a 'conjunction', with the meaning 'for this reason' or 'this is why', used to join two clauses to make a complete sentence:
1st clause = Toni is five years old and believes in the tooth fairy...
2nd clause = ...so she put her tooth under under her pillow
Anyway, in my opinion, the sentence can be shorter with the same meaning:
Toni, five years old, believes in the tooth fairy, so she put her tooth under her pillow.