I think it's a stretch and a bit of a cop-out to say that it's her responsibility to work on her vagina to make it tighter. You wouldn't say it's anyone's responsibility to make their dick bigger would you? I doubt the idea has even popped into her head. I mentioned kegels and how I practice them to my girl and she said she could do them, but didn't ever think about practicing herself (and I still don't think she gets the point, which I'm not trying to push on her).
That said, it would be a nice and constructive thing for her to exercise, but it would take a wiser man than me to know how to break that to her. I feel like it might come off as vaguely hypocritical for a man seeking ultimate validation that his penis is perfect the way it is.
I completely understand the blow to the psyche this must be. I would be lying if I said that I would expect it to ever be struck fully from your mind. However, none of the feedback she's given you was unsolicited, and she never seemed to actually imply that you were not enough. You can say that she did so when you introduced the dildo, but that was just your takeaway from it. So no accusation should be levied against her mistreating the situation.
You said:
I have not had a all the way erection in 3 days now. I have lost all feeling in my genital region. It is completely numb. It would seem that the physical-mental reactions are hand in hand. Has anyone else experienced this?
This, in my mind, tells all. If it can happen to you, it can happen to her. Like Jackie Treehorn said, the mind is the biggest erogenous zone. There are a number of reasons why sex might not be popping off for her. She is very young, and very inexperienced. She may have been, from the start, concerned with your pleasure and her performance -- and like a dog chasing it's tail you inevitably played into that, which in turn further diminished her ability to relax. My guess is that this is primarily mental. The dynamic between two healthy intimate individuals should be secure, open, and communicative. Obviously this is hard to achieve, but it's much easier surmounted than gaining two inches of girth.
The problem is that the dialog at this point, regarding the sex between you has probably already become so muddled that it will be difficult to have a blank slate to have an honest and open discussion on the matter. My advice is to listen to her body (and her voice, of course) while you're in the act, and slowly start to introduce exclusively positive dialog afterwards. For example, ask questions like "it seemed like you liked it when I did ____," rather than "did you feel anything when we did _____?" And let it seem natural, so as not to come off like you're putting pressure on her.
It may very well be that with the introduction of the dildo and other toys or techniques, she will "awaken" her sexuality, but my guess is that it's more about her comfort level with actually having sex with another human being.