A martingale or any piece of tack is neither cruel nor helpful - it's all in the way it is used by the HANDS on the other end of the reins.
A ewe neck is a symptom of poor riding, and the continued use of a martingale or tie-down or chambon or strong bit or any gimmick is another sign of poor riding. Those pieces of tack can be temporary measures for a skilled horseman to help a horse learn new habits, but they won't fix anything by themselves and a truly skilled horseman doesn't need them.
Hooray for 4-H and their rules that require riders to learn how to ride, instead of allowing them to skate by with gimmicks.
Yes, a ewe neck can be fixed, and you're actually at an advantage that this horse hasn't been ridden much recently. There are very few horses who are actually built by nature with a ewe neck. The vast majority, if not all of them, are made that way by poor riding. Yes, a painful bit/bad hands on the other end of the reins can cause a horse to carry itself with a high head, hollow back, and eventually develop a ewe neck. If she hasn't been ridden that way lately, then those inappropriately developed muscles and physical habits of poor posture aren't as freshly confirmed in the horse.
Find resources for learning about *classical* dressage - not the latest fads in the dressage show ring. They are the polar opposite of the original dressage, which is a system of training that promotes the horse's maximum performance and soundness for a long useful lifespan. Alois Podhajsky, Jane Savoie, Jessica Jahiel, Dr. Ritter, there are many great resources out there.
Make sure her bit and saddle are comfortable. Don't use a broken mouthpiece with any kind of leverage, even the tiny bit of leverage in a Kimberwicke. The only place a jointed mouthpiece belongs is on a true snaffle - a bit without any vertical leverage, so nothing with a curb chain or strap. Remember, this posture comes from discomfort, so you won't change it if she is still uncomfortable. Get a saddle fitter to check your saddle on her. Keep in mind that if you're successful in changing her posture, the shape of her back will change for the better and might require specialized padding, re-flocking, or a whole new saddle.
Help the horse learn to carry her head low for starters. All she knows now is star-gazing. It's fine if she drags her nose on the ground at this point - you've got to undo 5 or 6 years of bad postural habits caused by pain/discomfort in her mouth, on her back, and who knows where else. Engage her hind end so she starts to carry herself with her hinds, not just pushing herself along like a wheelbarrow. Just ask her to 'talk' to you with the reins - don't try to acheive any kind of collection! Let her know that you want her to be comfortable and carry herself well. It's very uncomfortable for a horse to go along with its nose in the air - remember Black Beauty's days as carriage horse to the snobbish b***h who wanted his head pulled up in the air? He was in misery, and so is every horse that goes in that posture.
As her muscling changes, and you can see it, especially if you take photos every month or two, she will be able and happy to bring her *poll* up, but not her nose. Gradually ask her to come into your hands more, over the course of months. You'll see the ewe neck disappear and a lovely topline emerge.
At 8, this horse is still young enough to reshape her body and have a long useful life as your 4-H project and lifelong companion. Enjoy!