What I meant is that she probably just looks at the northern horizon, and since it is not there, it is "higher in the dome". I don't think she understands that the farther north you are, the "higher in the dome" Polaris will be, and the closer to the equator, the closer the north star is to the horizon.

Wow, I think you hit the nail on the head. I never even thought a person could misunderstand that, but the way you just explained it makes perfect sense. The funny thing is that "how high in the dome" Polaris is does tell you an important bit of information, just not the information Nancy thought it was telling her. It tells you your latitude, it will always be just as high over the horizon as your latitude coordinate, give or take a quarter degree.