The UK isn't part of the Schengen arrangement.
The government can revoke her passport. This would prevent her from boarding a UK bound plane from most countries. But if she did manage to reach UK shores, she can rightly claim that she is a British citizen and there is nothing that anyone can do to stop her entering......unless the government passes a specific legislation, targeted at her, to revoke her citizenship. Then, and only then, can she be refused entry into the UK.
Being a citizen of the UK trumps the EU travel restrictions placed on her, but she wouldn't then be able to travel onto elsewhere in the EU.