Wow, definitely document everything. Do y'all have a policy and procedure book? I'm just asking because with my company we do, and there is a section on professionalism towards supervisors. I would print out or copy the areas she is violating and have her read this to know her behavior is not tolerated per company standards. This keeps it from being personal during the discussion. Also, like everyone has said, have a witness.

If she values her job she'll shape up or you can show her you have company grounds to show her the door. Don't stress over standing your ground, she will just make your job a lot harder if you back down.

side note: although smacking her would make you feel a little better