Good on you for prioritizing your mental well-being.
I think the offer to be a go-between was made out of kindness (though you’re absolutely right to not take her up on it, F that other lady). If she shows she can respect boundaries as well, she’ll definitely be worth keeping as a friend. If she can’t, well, you already know what to do.
If someone is aggressive or cruel, I find it very easy (and satisfying!) to set boundaries and firmly enforce them. But if I think the person‘s intentions are benign, I will let those same boundaries be trampled over out of a desire to avoid conflict and people-please.
I don’t know if you have the same problem but, if so, extra good job.