Tell me honestly . . . Penelope?

Yes!!! Do it! Gorgeous choice, but still rare enough to give her individuality. Other possible nicknames are Penny, and Nelly. I'm not sure how I feel about Poppy. That's what I call my grandfather. As for the middle name, go with Jane. I think it sounds so much more interesting with Penelope. Ann sort of dulls down the name. Penelope Jane has a really nice sound to it, plus you could call her PJ!