Expatpat, since your wife was born in the Canal Zone, she can get her Panamanian documents if she ever returns to Panama. She has to get a certified copy of her Canal Zone birth certificate from Washington D.C. (State Department), get it authenticated by a Panamanian Consul in the U.S., and it's good to go.
When we were last in Spain, the immigration folks couldn't believe she didn't speak Spanish when they saw her place of birth!