Worth the fight.

wolfsoul was right about her not listening to a mom. Mom's are old and don't know anything in the mind of a 16/17 year old.
Find someone who you know she admires, for her taste in clothes, ask that person if she could help. Maybe give her some money to buy your daughter an outfit and help pick it out.

Also I like the picture idea, with one little added thing, don't tell her that's what your doing, trying to "show" her. Once she knows your trying to "show" her, she will disagree, just to prove you wrong. Just snap a picture of her one day, wearing an outfit, that makes her look bad/fat. Later, get her one outfit, that you know will make her look good. Just make sure it's still in her style. don't want to change her wear to drastic. Ask her her to just put it on for you, just to see, she can take it off later, snap the picture. Later, later have both pictures out and let her see them, on her own. Without thinking you where involved in it. Who knows she might just see the difference that way.

Ok, this idea is not from me, but my sister-in-law had the same problem. Even though at the time I didn't agree with her, this is what she did.
She posted two different pictures of her daughter, with different names, different outfits (one mom got, one daughter got) on one of those rate the person sites. After some time mom showed her the site and the different ratings. Mom's outfit, had better comments. The picture with the daughters outfit, got comments, but not the kind a girl wants to hear. Most of them where crude sexually remarks. Kat, now dress more mom's way. Still crop tops, etc etc, but at least they fit and she looks so much better. It took other teens, to show her how bad she really looked. I just telling you what she said........not my idea! But in her case, things had gotten really out of hand, so my sister-in-law was at the point, where she had it.

Oh and the goodwill idea.....like it. She'll be mad, but she will get over it, in time.