If the people who hired her were thinking straight, they hired her for more than just her ability to write code to a strict specification under strict supervision. A number of developers are valuable far beyond their ability to make a computer do their bidding, and the employer who does not care does so at their own peril.

She may come off as a little overbearing, but I don't get the sense that she is unreasonably set in her ways. I get the sense that she's passionate about doing things right, and will take up issue when something doesn't make sense and push back until things do make sense. If you think these are the same, I'm afraid your model of developer behavior is flawed. Strong beliefs can be weakly held.

And it is possible that refactoring code that works is worth $XXX/hr. Consider the savings that might be accrued later on due to shorter bug-fix cycles, quicker feature releases, and less overall malaise of the development staff. Not everyone can be motivated by having their paycheck treated as a carrot on a stick. So the money might be very well spent.