I had a nice comment from Renee on my last post and I want to respond to her. There was no link to her, so Renee, I hope you are reading! I think your plans for your daughter's doll sound great! The American Girl dolls are very cute, but not neccessary to the fun of having a companion doll because, as you said, they are very expensive! Your doll will terrific after you make her some new clothes. If you have a Hancock Fabrics near you, you probably know that almost every weekend they have sewing patterns on sale for .99. Usually just one brand at a time, McCall's or Simplicity or Butterick. It doesn't really matter because they all have patterns for 18" dolls. So that is your quickest option. Pick the simplest pattern and have fun with it!
Another way to go is The Doll's Dressmaker by Venus Dodge. This is a fabulous book! It is out of print so your options for getting it are more limited. This book has so much good information and so many great ideas. With this book, you won't need to buy patterns anymore for doll clothes. Now, if you are somewhat new to sewing, you will need to be patient and do exactly as the book says as far as getting the patterns to fit your doll, but once you've done that, you can use your pattern again and again.
I hope you will write to me (bettsi_mccombATyahooDOTcom) if you have any further questions. I'm happy to help and I'm jealous! My daughter grew up too fast and she was never much into dolls anyway. Grandchildren seem like a long ways away too! Good luck!