She's getting +2 sorcerer casting levels from Loredrake, a true dragon specific template from Dragons of Eberron.
Basically, only dragons which advance through age categories can take the template - because Shifty's a dragonwrought kobold, she arguably "advances" through ages to venerable (gaining +3 to mental stats), and can take the template, which trades your racial casting (Shifty has none to trade) for +2 to effective sorcerer level. It's a common interpretation that leads to sorcerer kobold 6 with sorcerer 10 casting after you add in the rite of passage and white dragonspawn.
Given that master transmogrifist loses so many CLs anyhow, it's not as broken on this character as it would be for others though. Shifty missed a few of the really kick-ass forms (like her, I'd definitely go for the cryohydra, octopus tree, and war troll though). Kuo-tua leviathan, sarkrith thane, and gray linnorn belong on that list as well.