As a parent who grew up in an abusive home-life situation, I can connect with your wife's perspective. Growing up, I never knew when the next blow was coming. I could say something "wrong", have an expression on my face that looked "disrespectful" and suddenly I was slammed up against a wall getting yelled at by a man who I didn't doubt was capable of beating me into unconsciousness.
The first time my husband did anything "violent" (ie, throwing an empty plastic hamper at a wall) I reacted inside as if someone had struck me. Kids who grow up in a situation where they were constantly threatened develop a knee-jerk reaction to any physical (or verbal) expression of anger. We also overreact to the idea of punishment, because punishment was never appropriate or deserved. It was used by our abuser to make himself (or herself) feel good, at our expense.
I've been through years of counseling, and also spent a couple of years working with other adults who grew up abused. Though I have never met your wife, based on my own experience and stories that I heard in the years coordinating an abuse recovery group, I can tell you that she has a deep well of anger. All abused kids develop it. (And it never totally goes away; the best you can do is acknowledge it and take measures to deal with it.) Whenever you want to punish your child (regardless of whether the punishment is appropriate or deserved) she is going to immediately flash back emotionally to her childhood. You suddenly become her father.
Let me be absolutely clear on this; you can't "fix" this yourself. She needs to be shown by someone who she does not associate with her family (current or past) how her upbringing has warped her sense of perspective. Do not point this out to her, by the way. It will make things worse, I guarantee it.
She needs to get into counseling. I don't know how opposed she will be to this. I was lucky, in that a man who I admired greatly and who was also a brilliant counselor, set me up to have a very positive attitude toward counseling.
Even with this, for me, it was a very long and steep climb. Trying to rewire a brain that is screaming at you "this is wrong! this is scary! this is dangerous!" is not fun and takes a great deal of strength and, most of all, trust. Her counselor will need to be able to gain her trust, and you need to gain her trust. This isn't any reflection on you, but simply having good intentions isn't enough when you are dealing with abuse survivors. People have triggers that make them feel "safe", and abusive survivors need them more than most people. You need to learn your wife's specific trust triggers. Once she is able to feel safe, she'll be able to deal better with situations which trigger her "alarms" but which aren't actually alarm type situations.
By the way, I don't know if this will make you feel any better but you are fortunate in that your wife went the "right" way in falling on the side of "no abuse, ever". Many kids that grow up with abusers become abusers themselves. She deserves to be given credit there.
