I'd be willing to bet that since it was your idea, you have a much better understanding of the problem and how you're solving it than she does. Use that too. See where she falls down in her offering and exploit it.
Just my two cents.
Force her to launch earlier than she wants to. The other thing I'd say is some 37Signals advice. Hold back some completed functionality at the time of launch. Release it in a week or twos time. Thus demonstrating that not only did you launch but you are constantly going to be ahead of her.
Finally, please use the anger judiciously. Instead of running her over, crush her spirit.
"Here's another way to look at it. If merely telling someone your idea means that it can be ripped off, then you hardly have a defensible product. If secrecy is your main weapon, then it will be hard to find investors. By the way, what happens when you ship? Are you going to ask every customer to sign a nondisclosure too?" And what about your first employees?
(quote from an Old Guy Kawasaki Column) http://www.forbes.com/columnists/2005/06/16/entrepreneur-venture-capital-kawasaki-cx_gk_0616artofthestart.html
And if you think the fact that her seed-funded team of 5 developers gives her an indomitable advantage, think again.
It's not what you do, it's HOW YOU DO IT.
So what action should you be taking? I'd say to look real hard at what she's doing. If she nailed it and has built something great, find another idea. They're everywhere. If she hasn't nailed it and you can make a better product, make it.
And, if you're feeling vindictive (I wouldn't bother with this), you could plant a few seeds within your shared network-- tell your mutual friends/contacts what she did.
These are webapps, not operating systems, not mainframes, not databases. The barrier to entry, cost of operation, and development time are all pretty low. You can hire the PR people when you actually need them (probably sometime after you actually have cash flow). There's plenty of ways to market a webapp for free, and I sure would not hire a marketing firm to promote my new site.
ideas are cheap, implementation is hard.
I am very competent web app developer, with several major applications under my belt. While on the surface you might think you will be able to whip out a clone of one of the popular web apps easily (let alone a brand new idea) but you will find the devil is in the details. What makes or breaks those sites are the thousands of minute implementation level decisions which build up to make a quality application.
Complex software takes good knowledge of complex algorithms and man-years of development. Well.. since everybody wants to get rich quickly these days, innovation scaled down to web "applications", where the only valuable thing is percisely the idea. And your only advantage is the time to market.
It took years for other big firms to develop search engines as good as google's is. THAT is what I call "implementation is hard". Implementing something as trivial as myspace is less complex than compiler class project in college. (I've done both).
Why do hundreds of kids bother applying to YCombinator?
Can't they just whip up a webapp in a few months?
Yes - web dev is easier than desktop app or complex client/server applications, but Hitting the High Notes (as Joel says) will never be "easy". Simple, yes. Easy, no.
Hate to sound negative though, having that happen to you surely hurts...
And yes, kids apply to YCombinator exactly because they can whip up a web app in a few months. YCombinator puts them in front of VCs after that.
There are always exceptions to every rule though, re: the original point.
i.e. MySpace. Talk about crappy technology (or so it would seem; they've managed to scale well), and a has-run idea.
Thinking "it's implementation, stupid" is too narrow-minded and Web2.0-ish.
they have downvoted you.
you now have -1 points. As I learned myself.
http://www.paulgraham.com/startupmistakes.html 8. Slowness in Launching
what is her website url?