Thank you everyone for the advice, though I think everyone but MM is going to be a little dissapointed in me :\
I emailed the woman earlier this evening, giving her a list of riders from our barn who I know are looking for rides and are perfectly capable of taking on this mare (I've ridden her before, very easy going easy to ride) and that my descion had nothing to do with her personally, I simply didn't believe I had the time to truly give her the attention for showing she deserves. I thought about mentioning the bit of scrap between my coworker and I but decided against it. Horse people are talkers and I don't need to add anything to fuel the fires.
I'm a little dissapointed I didn't get to ride this mare about but in the long run if it saves me drama its well worth it. There are a LOT of people in the area who got their horse from my coworker, like I said she is a really aggressive seller, and too that they are loyal to her. She's not a bad person at all, she just likes the drama and is very protective of her 'image'. She still won't be taking care of my horses (that was settled in the previous thread, the care of MY horses comes over any crap she'd pull in the barn 100%) but taking one of her clients now is just not smart. We'll see how things go over, I'm hoping that if I just steer clear and keep my head down around her it'll blow over and we can resume the previous relationship we had. Which was dividing out horses for lessons and thats it.
Also MM? You have no idea how appealing the idea of that last sentence of yours can get sometimes -.- horses are like highschool sometimes.