CarolinaGirl

It really will depend on how the Canadian government processes her application. If they look into her current residence and see that she's living in the US then likely they would deny her application. I would suggest that she enter Canada with her Canadian PR card, typically at the border they will ask where you live though, so they will likely find out.
I am in a similar situation. I am a USC and have CDN permanent residence. I applied in May for CDN citizenship, but my husbands visa to the US was approved so we will be moving to the US before the citizenship application is finished. Luckily even if my citizenship application is denied I can maintain canadian permanent residence as long as while living outside of canada it is with a canadian citizen. My husband and child are both Canadian citizens so that shouldn't be a problem.
Good luck figuring it all out. I would imagine that your wife will have to at some point choose to either keep the Canadian PR or US PR.

1. I was looking at the timelines as far as when others had NCV completion until their interview and comparing the times and most seem to be between 1.5 to 2.5 months apart. My question is how long from NVC completion until you were notified of your interview date? We received NVC completion March 22, and we will need to book airfare and such for our interview so I'm a little anxious to find out when?
2. Also my in-law's (who live in Ontario) have offered to cover my airfare cost(I'm the USC) so that myself and our 8 month old daughter can come out as well and they can see us... well really the baby is who they want to see. They have offered to watch her for a couple of days while we go to the interview, but I'm wondering if it doesn't help our case a little to have her with us? Anyone have any insight into this? Is it better for my husband to go by himself to the interview, or for myself and or our wee babe to accompany? I kind of thought we would get the sympathy vote if we have a baby with us, but maybe they are heartless