My 7 year old stepdaughter just killed our pet dog. Should I be concerned?

Two weeks ago we found the body (without a head) of our puppy Max in the garage under a sheet. We thought maybe a psycho neighbor broke into our house or something. We didn't know what to do we didn't even go to the police. Yesterday, we noticed a bad smell in our daughter's room and I thought maybe some food went bad in there so I was looking for the source and I found the puppy's head in a suitcase with a knife in the eye. I affronted her about it and she said that the dog sent "telepathic wave threats" to her mind and that she "had had had" to kill it. What should we do? Should we start to get concerned? She's been violent before. She's punched and strangeled me when she hasnt gotten her way and shes been having all sorts of trouble in school. Do we punish her?