I wish I knew more about 457s and other teacher retirement plans.
Regarding what I do know, .26% is not bad at all! Don't get caught up in fees, I'd be more concerned about the fund's tracking error (i.e. over long periods of time, does it underperform the benchmark index?... you can look this up pretty easily on yahoo finance and just put two lines on a chart).
If the tracking error is low, the expense ratio is really irrelevant. Point being, what if the stated fees were 4.5%, but it still kept up with the stated benchmark index? This is not a realistic example, but my point stands. Concern yourself with tracking error first, and among the funds which have equivalent tracking errors (to the same benchmark), choose the one with lowest fees.
As far as contributing, no. As long as she works there, most plans (check with the plan documents) don't allow you to roll funds out until you leave the job.
At your income level, anything pretax will likely be valuable over time. Since you're already maxing out your 401k, two Roths, and $1k/mo in a taxable account, I'd just put as much as possible into the pre-tax employer plan and be done with it.
Again, .26% isn't going to hurt.