Hydronephrosis occurs when one or both kidney's do not drain well (the urine build-up in the kidney, and the urine subsequently not being able to evacuate the renal cavity, cause swelling of the kidney).
A number of things that could cause the kidney to not drain, but the first 2 that pop into my head are, 1) ureteral blockage, and 2) physical abnormality.
I would get to a pediatric-urologist as soon as possible and have them do a workup. If she has a history, howerver brief, of UTI's, there's for sure something going on inside that needs to be looked at.
I can't believe your pediatrician hasn't steered you in that direction already...
Good luck.