Honestly, it doesn't sound like Nee's DD is going to pay much heed to words and distraction will have limited effect! It doesn't sound like a parenting quality issue (though, yes, using words and explaining to a language-oriented child reflects a parent responsive to their child's learning and communication style, so thumbs up!), rather it's a harm minimisation one.
And in kids like these, saying "don't touch, we don't do that" will probably ensure the child hears "touch, we do that" (if adults brains barely register negatives, kids' brains are even less able to register a negative before a verb) and always reminds me of the old commercial for whatever cereal that was where the mumma bear says to the baby bear "Now, you behave" and the baby bear says "Beehive, yum!".
So, if risk removal is not available, distraction and removal of child to an activity s/he IS allowed to do is the only other practical option.