L.B.
Go to your reunion, leave your daughter home and tell her that your daughter could not make it because she had another commitment. I doubt that anything you say will make her change, defensive people are hard to talk to and it will probably end in an argument.
Do you enjoy this person's friendship? Friendship is about being with people you feel good about being with. Sometimes, we need to move on and away from the people we were friends with when we were young because they grew up to be people that we do not really like, but for some reason so many people feel an obligation to remain in draining friendship just because of the history. Your friend sounds judgemental and critical and unhappy and yeah probably has some mental illness -- If you don't want that negativity in your life or your daughters then let go of the friendship - it should be easy to go your separate ways seeing that you live in different towns. You don't have to say anything, just distance yourself.
Good Luck