I am a "spanking parent" ,too. I try to always find another way to deal with the problem, but sometimes a spanking IS the way it needs to be dealt with.
I have had two twelve year olds and it did seem a little odd to me to have to spank them at 12. I don't think there is anything wrong with it at all, it just felt different than spanking my little ones. It seemed as though it was a little more of a humiliation thing rather than a discipline thing, although they never told me this. It was just my own feelings.
As far as stopping now that she's 12, I don't think there is any set answer for this. I think you have to take the mental development of the child into consideration. Also, how does it make you feel? Are you confident that you are doing the right thing when you spank her at 12? Or, like me, does it feel somehow, not fitting?
Your daughter makes a good point saying she feels more 'forgiven' when she gets a spanking...because when she gets spanked, it's over and it's done with. No long drawn out punishment. However, maybe she needs to have the long drawn out punishment, sometimes. I don't really see that letting a chide pick their own punishment is actually a punishment. In my opinion, if a child has earned a punishment, they have "dis-earned" the right to make a decision on that punishment.
That's just my opinion. Like I said, I don't really think there is a right or wrong answer here and every parent has to evaluate each situation individually.