I am foreigner living in UK and local council and government constantly screw up foreigners names, we always have a good laugh about it with friends.
The locals in this case still resent the way that the USA took over in a coup. See http://en.wikipedia.org/wiki/Overthrow_of_the_Kingdom_of_Haw... for the history.
She's not actually Hawaiian, but she married a native Hawaiian and took his name. He passed away and she wants to keep the name to remember him by.
In Hawaii right now there seem to be two prevailing schools of thought.
1) It's the state's responsibility to respect everyone's name.
2) She shouldn't have to change her name, but they don't have to put the whole thing on her ID