Why wouldn't "What beauty!" work?
It works perfectly. It just looks like the author of the course doesn't know that 'beauty' could be both countable and uncountable. And in this case it should be uncountable. So you're right, "What beauty!" is the best translation here.
"How beautiful!" should also be accepted. Incidentally, the proper translation of "a beauty" would be красуня if in reference to a woman. :)
Who doesn't love when Duo teaches you flirting?
I agree. "How beautiful"
also seems correct to me.