but I feel like with her grades she could do much better

If she doesn't get a lot of merit scholarships (right now she's a big fish in a small pond, somewhere "better" she'd be a small fish) or need-based aid, she could end up several tens of thousands in debt, easily. Look at some better schools, the cost of attendance for some of them breaks 60k a year! On top of that, if she has any aspirations for post-graduate studies, especially professional degrees like medicine or other clinical work, where she did her undergrad may be a very small factor compared to what she did there. There are many opportunities available at most schools, if a student is willing to seek them out.

I'm honestly intimidated and freaked out.

No kidding, your side of the interaction was definitely panicked and irrational, if I may say so. You seemed to be struggling to find something, anything, to latch onto. Have you talked to your husband about this at all? You may want to talk to people in your life who know the both of you, to help you check back into reality, as I'm more worried about you going off the deep end than her, to be honest. Suggesting a psychiatrist for your daughter was completely out of line. I know you want to help, but I'm sure you know as an obese individual (speaking as a former one myself) that it works best when you find your own fitness and nutrition goals and strategies, rather than being forced into them by well-meaning others. As someone very similar to your daughter, taking my books away would not result in me adopting the desired habits for life, and would instead instill a lot of resentment.

Best of luck to you both.