It's a choice only you can make. Sounds like you really enjoy this horse and that is the most important thing. Only you can know if your desire to go farther than her talents is more important than your desire to keep her.
Don't know where you are, but you might also consider leasing her out, but only if you find the right person. A 4H kid with gentle hands that will love her? Just a thought.
And if you decide you want a baby out of her, that you will keep it and care for it, that is your choice and not such a bad thing. Just understand that babies don't always turn out like you plan them to be. But they sure are fun.