I don't have a problem with her dressing herself as long as it's appropriate to go out in public and for the weather. Sure, she doesn't match half the time but she likes the way she looks and likes dressing up to make herself pretty.
I know a lot of people don't let their kids do that. Certainly, play time and dressing up like princesses is one thing and going out to the store is another, but does it really matter a whole lot if a three-year-old wants to wear a pajama top with corduroy pants? (What she's currently wearing, btw.)
I've never been one to dress up. I recall being yelled at and ridiculed by my mother for not wanting to change an older t-shirt I had on one day because there was a little dirt on it from working on the yard. I was to go to town with her to get something, not anywhere fancy, and then I was going to continue playing and working in the garden. It was hot and I didn't want to have to get redressed as soon as I got home. She shouted and made her point loud and clear: Everyone was going to think bad things of her because I had a spot of dirt on my shirt. It sounds ridiculous, but it's true. I just don't want to do that to my own kids.
Do you have any issues with what your toddlers wear when they dress themselves?