Very cute Kiwimum
I have a few thought and Ideas, most of which we either did or still do with Alex. We started really trying to work on her narration skills, story-telling, and teaching-back skills at about 2.5, with a big boost in effort just before her 3rd bday.
1) the first thing we started was just getting her to attempt to give a few sentence narration of what had JUST happened in a short picture book we read. Of course, with lots of prompts and questions in the beginning. It sounds as though you are doing something similar with story-telling (which we also did some of then), but I did want to make sure she was also modeling from great books with lovely vocabulary and proper sentence structure.
2) storyboards/puppets- Give her a venue! I bought one of the large felt storyboards, and several sets of felt 'characters' to go with it. I bought a few popular story sets like a farm set, a family set, etc, until there was a pretty good mix. Then I showed her how to use them to enact increasingly elaborate scenes and stories. I read somewhere that having them do this concretely helps them to develop more vivid mental imagery, in greater detail, that translates into their ability to do it without the aids. This made a lot of sense to me, and I have seen it work with Alex.
We also built a larger puppet theater for her for this reason!
3) Rory's Story Cubes- these I HIGHLY recommend! If you haven't seen them, it is a game of sorts. It is basically a set of 10 6-sided dice that have only pictures on them. We have two different sets, the original and an 'actions' set. You roll the dice, look at the pictures you garnered, and have to tell a story around them. It really is hilarious, and it has made me appreciate the sheer genius of the concept--as well as the ability of kiddos to do it!
At your daughters age I would actually suggest making your own: take 4-6 blocks, paste or draw a picture (more effective here than a word because you want them to think in terms of the images. I also find it is useful for memory practice.) these pictures should be things that interest her in the beginning, but make sure to vary the categories. You want a lot of pics that seemingly do NOT go together to get their creative juices flowing:)
Alternatively, there is a Rory's Story Cube app available that is nice.
4) definitely journaling. Let her watch you writing her stories and thoughts on paper. This made a big difference to Alex as she not only loved to read and reread the things she had made up, she wanted to make them bigger and better. I also think it is important that they I know you value their stories enough to record and share them
5) vocabulary building- this is something we do a lot of still, with lots of games and apps, but we use specific games for the story-telling/writing aspect of it. For example, if she uses a bland word, we might discuss 4-5 synonyms that might create a more powerful image or convey the meaning she wants. At your kiddos age you might just separately play a simple synonym/antonym game.
6) practice visualization, making 'pictures' in her head. Ask her to take a picture with her mind of something I. Front of her, close her eyes, and practice describing it in detail...eventually you can get her to visualize things for her stories, using more imagination that something tangible she can look at.
7) tell her stories of young children that have written and or published stories at young ages! There is something powerful about a child seeing that another child has done something. I can't think of names of the child authors off the top of my head, but I did look at one point.
Anyway, maybe a couple of ideas will appeal...