She doesn't really mean that it was inappropriate in the sense of social standards, she means inappropriate in terms of your interactions up to now, i.e., being a little too familiar. Saying someone is "cute" in that fashion is kind of a personal comment, and would not be suitable in business discussions, for example.
Since you have presumably only had neutral, platonic type exchanges up until now, she took a chance by flirting very mildly with you (referring to you as being cute in some fashion), but then apologizing for the comment preemptively in order to avoid causing offense if you either didn't want to her to comment on you in such a personal way, or possibly because she expects some guys would be offended at being referred to as "cute."
She didn't mean anything terribly significant by either the comment or the apology, in other words. At most, the comment was an indication of an interest in being a little more personal.