Ruby Pinch was in a vegitative state, and her mother couldn't afford to keep her on life support, so she did something reckless. She donated Pinchy's body to the soul reclamation team, in a sense. Souls have kind of a waiting list to see who can be alive, and by donating Pinchy's body, someone's soul could skip the queue so to speak. Her mom's effectively donating her committment to raise a filly, adopting a soul to live as that filly.

So she finds a soul at the soul shelter (wat) instead of going for a "fresh" soul because Pinchy's an 8 year old filly, and her brain's kind of lost all its memories what with the whole vegitative state thing. So a soul without any memories would render Pinchy an 8 year old infant. Plus her mom has a soft spot for the discarded and rejected, and also adopted a previously owned pet. It's dangerous though, because only certain basic things can be determined about a soul, its memories not directly accessable.

* how they felt when they died
* how happy they were in life
* how many regrets they have
* what's their favorite animal
* how much compassion do they have?
* do they know a lot, or a little?
* honesty, loyalty, kindness etc.

She finds a very compassionate soul, that struggled with great sadness in life, and died full of regret. It's not very popular, since it's a hurt soul, that was recovered from an otherworldly fragment that found its way to Equestria. Plus it's an eight-year-old soul, yet has way more knowledge than an 8-year-old could possibly possess. The (correct) speculation is it's somepony who never had a chance to grow up, and stayed stuck a young soul until they died. How old they really were? Who knows.
Honesty - not very honest, kind of crafty
Loyalty - strong, but injured
Kindness - very kind, their most shining virtue
Laughter - very weak, like a guttering candle
Generosity - average, not super charitable, but not stingy or unhelpful. Abandoned.
Magic - none. The biggest reason nopony wants this soul, is they can't imagine anypony would have no magic, (i.e. no friendship at all.)

So mom learns that it wouldn't take away her daughter's unicorn magic, but could care less. She's got more hospital bills than she knows how to deal with, two jobs, and all she really wants is this nightmare to end. She wants her daughter back, and also to a degree, she wants to not be such a terrible mother. They explain some other stuff, but she's not much for recalling the details. Or Saturday night. Or Sunday.

She knows her daughter's going to have different memories, but is honestly curious what a pony from another world is going to be like, and wants to see what they're gonna do in Equestria. She wanted to be in the Interspace Program as a filly, before kind of... getting passed on by, getting pregnant, and falling into depression as she feels like a failure because of her cutie mark, and her failure at being a parent. She's actually really brilliant and capable though, if she'd ever stop drinking.

Plus she has a week to return the soul and exchange it for another, so she's willing to risk it. Anything would be better than seeing her daughter lying there so silent and still.

Incidentally, they used a come-to-life spell to animate Pinchy's body in order to recondition her muscles. And that was somehow even creepier than lying there so silent and still, but when Pinchy awakens she won't need physical therapy.

So our story starts, "Pinchy" wakes up, finds herself in her dream life, and sorta flips out trying to conceal from her mom that she's not the real thing. She figures out that she's been injured for quite some time now, then much later finding some unfortunate medical bills, and lying, cheating and stealing to get them paid off for her mom. She doesn't have much help from her mom in getting friends, but she's curiously good at it, unless you don't know what she's doing with her friends in secret.

Mom isn't a unicorn, but knows a lot about magic and stuff, in a secondhand way. She wants Pinchy to have a real instructor though, but can't afford it needless to say. Pinchy still starts getting pretty magical, mostly from the "friendship" she's experiencing, not just the sex, but also levelup style adventures, that are compounded by having companions. In short, the universe loves new Pinchy, and she takes full advantage of that, living a full life with out regrets, and making no apologies, unless she really, really screwed up.

Oh oh actually Pinchy gets magic instruction from Twilight Sparkle! Since this is right before season 1, Pinchy knows that after a confusing ceremony, the most powerful, knowledgable, brilliant and talented unicorn in Equestria's going to be nothing more than a librarian. Time to pull out the puppy eyes, and get herself some free magic lessons. Extremely difficult, and trying, but free!

After Pinchy's had her epiphany of awakening as a pony, she quickly gets higher Laughter, and all the adventures sends her Magic going up. Generosity increases slowly as she accepts her role in taking care of her mom. Loyalty uh... doesn't do much. Berry's friends would have to need to be defended at personal risk for Berry to show loyalty. Maybe late game she gets all blood brother with her best friends, and learns all sorts of Loyalty.

Kindness stays high. Honesty stays uh... low. Yeah, she's not... ever really going to be very honest.

Berryshine's really poor, actually. Most mothers live in small herds, so single moms are at an extra disadvantage. Plus with her drinking and depression, and her failed career, and the hospital bills... yeah. Pinchy's gonna be making more money than her mom pretty soon, though certainly not by legitimate means.

Pinchy should never resort to whoring out her body, since she remembers how horrible it was to have sex withheld from her, so doesn't have the heart to do it to any colts herself. But she does find ways to steal stuff, and get away with highway robbery, as a foal.

And of course, Pinchy is a total pedo. Immediately tries to start having sex, which makes it look like she's a hornball at first, but then it's revealed that she thinks her time is precious, since between 8 and 12, she can pretty much have sex without consequences. In particular, she finds colts who want to have sex, but are afraid of getting in serious trouble, and don't know how to sneak around and do it, even if they were allowed to be friends with a filly close enough to ask.

It's not <i>strictly</i> unallowed to be friends with fillies, just same-sex friends is strongly encouraged, with no support at all for inter-sexual friendship.

So she seeks those colts out, and uses her wiles, genre savvy and lifetime of experience to find ways to have sex with them on the sly. She promptly gets swept up in the emotional storm of an eight-year-old girl discovering her own sexuality, and starts losing control of her urges to feel that happen again. Enjoying it profoundly, instead of just doing it for fun, and for the sake of saving lonely colts from a childhood berefit of pedo.

Not to say she does lose control, but it affects her more than she's ready to deal with, and she spends some time angsting about "what's happening to me, I'm not supposed to be the one who needs sex."

Maybe she does some other stuff, like seduce a teacher, have sex with her mom (totally not incest b/c their souls aren't related!)

So mostly the story is about Pinchy learning how powerful sex is, and how much it can affect her (without any getting pregnant). It's also about her healing from wounds that our world only ever inflicts, never heals. It's about Pinchy finding friendship, and learning to trust herself again. And about Pinchy finally having the chance to play, and be a child.

But it's also about the redemption of Berryshine. Pinchy's got to learn how brilliant her mom is, and about her troubled past, and figure out how to get Berry off the drink and having hope again. Because to lose hope costs you... everything.

I suppose if she has sex with her mom, eventually Pinchy can invite her friend over, and show her mom how they have sex together. 

As for overarching world saving stuff, maybe Pinchy could start a movement, or appeal to Princess Celestia in some way, convincing her that pedo is okay, and the important thing is to prepare fillies to deal with estrus, with birth control and education and such. Since one of the big things Celly and her sister fought over was that Luna was a total pedo, it could help Celestia prepare society for her sister's return. Celly's been looking for an excuse to push for more child sex in society, but still has some bitterness about it because how it tore her apart from her sister, and hasn't been willing to take that last step.

Pinchy could start some sort of thieves' guild on semi-accident, and work hard to make sure that it's aimed at improving the lot in life for ponies who the system is grinding down on, rather than screwing others and getting away with it. And since Friendship is Magic, she actually does!

Pinchy could revolutionize cutie mark education, by demonstrating how marks govern quirks in your personality, more than your destiny, or your driving goal. Ponies think they do, because when they get their mark, they interpret it to match with what they're trying to do in life. Twilight'd be so proud of her.

...maybe Pinchy could eat out Princess Celestia?

...maybe Pinchy could get a tour of Princess Celestia's personal grand dildo collection.

...maybe trying to eat out Celestia, Pinchy ends up unbirthing herself? Gets stuck in there, embarasses Celestia for some days, until she manages to give birth to Pinchy.

...since she's running out of air, Pinchy desperately magicks up an umbilical cord. 

...

Once out, Pinchy's like "Does this make me a <i>princess??"</i> with an <i>entirely</i> too delighted smile.