What would you do in this situation?

If you mean someone you used to know like an ex friend, I've got to say, that's really sad. Friends don't do that to each other, even when you grow apart. I think you should confront the main problem. If you talk to the people who already believe her, they won't really listen to you. They'll say you're in denial and you're just trying to cover it up. Sometimes, you have to get to the main cause. You'd have to talk to her and she might not see reason, but I'd say that she's jealous. I'd get scared to do it alone (as would others,) so maybe keep a friend close, but it's most effective to talk to her yourself. Especially in a public place. If she chooses to do something physical, then the public can see what she's truly like (and that's usually only when they're out of options and taunts). If she argues, then stay calm. Listen to what she says, then when she's done, you'll need to talk her into reason. The people around you might jibe you to start a fight, but you have to ignore them. The key usually is to stay level headed and think quickly, but don't hit anyone.