"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.