Actually, we did the whole process in TN. She went 6 mos without "legal contact" (physical visitation) and 6 mos without paying child support. Our attorney filed "request for termination papers/ simultaneous stepparent adoption paperwork", a court date was set, the bio mom was served with court subpeona (she did not show for court, etc). You need to have your paperwork straight- documented when and where she has ever visited, including time/date of any phone calls, letters. Also, if you have it, bring paperwork supporting that you are a wonderful parent
(report cards, letters from friends, family, pastor, etc saying your daughter is well-adjusted, etc). We went before an awesome female judge (the same one who gave my husband custody during his divorce), who talked to the kids (at their request), then talked to my husband and me. She just wanted to know if our kids had a positive relationship with the bio (NO!), if there had been abuse (YES!, and DCS had a casefile on it), and if I planned to be their "forever mom" (DEFINATELY YES!!). The whole process took about 4 months from the time we went to the lawyer.
And I would say yes, you do need to pursue the "dream" of being her mom. Every child deserves parents who want her, and love her. Also, you don't want to leave the door open that the bio could decide in a few years that she wants the "tax credit" or "child support" and decide to sue for custody. Your daughter could end up in a big fat mess- a drug house, abuse, etc. Trust me, it happens way too much.
What part of TN does the bio live in? Are you guys going to sue for termination where you live, or in TN? If its in the same county in TN as we were in, I can send you the list of awesome contacts that can help you out.
Most of all, in the meantime, continue loving your little blessing, and be thankful for every day you have with her.