I think it would be a poor choice for a first name, but it's completely fine in the middle. I don't think I'd pick it, but it's cute.
I can't help but think that she'll probably end up going through a goth stage, though.
The only Happy I ever knew was kinda goth! It wasn't her given name, which was Lynn or Lee..something very plain, but Happy was a nn from babyhood & she was never called anything but Happy when I knew her!
I think of it was a nickname. I guess it's an ok mn, but Katrina Joy flows better than Katrina Happy imo.
About any name/word could be used for a middle name. But Happy for a first name.. No way. :).