After reading your post it seems your biggest concern should be the fact that your fiancee's visa recently expired, yet she is still in Canada with you. This fact alone dictates that you should not file an inland application - because of the fact that her visa has expired, she is in Canada illegally and any inland application you file on her behalf will not be processed under the normal processing timeline, which takes 12-18 months as it is. Instead the application will be transferred to your local CIC office and become subject to their individual processing timelines. Some local offices are backlogged from 12-24 months. Besides that you are correct that, if she files inland, she'll be unable to leave Canada as she will very likely not be issued another visa to return - and because she is required to be present in Canada to be approved for PR under an inland applcation, that application would then be forfeited. In addition, there is no right of appeal with an inland application.
So, filing outland is your best option - although you're a little messed up now as far as her ability to stay in Canada with you during processing. It was important that the marriage and the application for PR happen BEFORE her visa expired - and then you could have applied to extend her temporary status, from within Canada, by
filing this application with proof of your marriage and proof of application for permanent status. At this point the only hope you have of her being able to stay in Canada with legal status is to get married immediately, get your fees paid for the PR application so that you can show you're going to file to sponsor her, and file an application to restore her status. This has to be done within 90 days of the expiration of her visa and is much more expensive than it would have been to apply for extension as a visitor before her visa expired. And there's no guarantee the extension will be granted - if it isn't, she'll have to go.
Ultimately, none of this affects the processing of the outland application - which is why it's a much smarter option than inland. She can travel home if she has to and, whether she's issued a new visa to return to Canada or not, her PR application continues to process. Visa offices in Beijing and Hong Kong process Chinese applicants - I don't know which office would process her file but Beijing is currently finalizing in 3-5 months, and Hong Kong in 8-13 months. And the outland process gives you the right to appeal a refusal.
As far as proof of relationship - if you've been living together during the time that she was legally in Canada and you have proof of that, plus pictures of you together at various events, and testimony from family and friends that you are a genuine couple, you should be okay. Not every couple fits into the scenario of being apart - giving them the opportunity to submitting copies of correspondence, phone bills, and proof of trips to visit one another.