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I only like it as a nickname, probably strictly for close family and friends to use. For Penelope I prefer it much more than Penny as a nickname, but as everyone said it won't grow up well at all. I'd encourage teachers and people she met to call her Penelope. Pippa could also work I think, though it's usually used as a nickname for Philippa.

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Kind of like the nickname Posy for Josephina. Cute for a little kid, would not want to call an adult Posy.