teen dressing in Italy

Not if you plan on visiting any churches. What you describe above is generally not acceptable. If you are visiting any of the historical churches or basilicas, in general, her shoulders will need to be covered, no low tops and clothing down to the knee. Also, clothing like that will definitely attact the young Italian males.

I don't remember seeing any Italian teens (male or female) in shorts. Capris, yes. Shorts, no.

Girls wear tights usually black with skirts and boots. Not many bare shoulders, except for at the beach. The girls I saw in Italy dressed like the girls in any other country. Some capri's, the only people I saw in shorts were guys (very few) usually jeans. People did tend to wear more form fitting clothes. I didn't see hardly any baggy clothes.

Just wear what you normally wear, that will make you look more confident, and comfortable.

Italian teens (at least in the North where I live) dress pretty much like emo/punk kids in the states. Not as extreme as American kids dress. But normally dark colored shirts, skiny pants (though not skin tight on boys), bermuda shorts, convers... purple is big for girls right now. The thing is that like the USA fashion changes every year. That said... dress how you want to dress. Don't try and fit in because in all honesty you won't unless you buy everything here.