Fortunately in our society when someone says they need time and space it doesn't always mean the end of the relationship. It means they want time to figure out themselves and be on the right track in life. We like to assume things and jump to conclusions, but sometimes people do need time apart to figure out what they need to work on themselves so they can be a whole person in a relationship and not by dysfunctional and co-depdent. She's being honest with you. She states she loves you, but acknowledging she has issues to work on. There are plenty of couples that do take time apart and do this, and get back together have a good relationship. Sorry that most people have a negative point of view about relationships. But there are positive sides to things.
Every relationship is different, and my suggestion is to keep talking to her and get down to the bottom of why she feels the way she does without jumping to conclusions. She's the only one that has the answers for you. My other would be move on with your life, but keep communicating with her on friendship basis, until she's ready to move forward. This is possible, and sometimes you just have to let go for the moment and allow someone to breathe for a second and get back on track.
We don't have all the information here, and really creating different and stories only brings you confusion, and doesn't give you a clear picture of what is really going on. There is her reality, your reality and the reality others try to create for you. Really trust yourself enough to make the right choice for you. You know her better than anyone. You already know the answers before anyone says anything to you. You are really looking for validation of what you already know and feel.