My 5yr old daughter has a 'bug bite' that keeps reappearing on the back of her neck (bottom of hairline). Could it be a recurring pimple? A cyst? Thoughts?

Recurring bug bite! It needs ot be evaluated by her pediatrician as it could be cyst(depending ont he site) that could be opeiing up, or a sebaceous gland that reopens and drains or somehting else. But it cannot be a bug bite, which you already know.
A low-grade infectio. This is not caused by a bug bite, but is a lpw grade infection even MRSA that keeps recurring. It is prudent to treat this with an antibiotic, such as Clindamycin or Bactrim (sulfamethoxazole and trimethoprim) to eradicate the infection. If the antibiotic treatment is ineffective, then one should probe the ares for forein body or retained hair.