Pity Party

First move I'd suggest would be to take some space. Don't see or talk to each other for a while. And by "while" I don't mean just a day or two.

If she still can't deal with your honesty after you've taken some space, write her a letter explaining in very simple, honest, positive terms, that you are breaking off your friendship with her, and why. Letters and notes may seem like a very junior-high-school thing to do, but honestly, they usually work best in these kinds of situations. You can take the time to think about what you want to say, then revise over the next few days as you try to read it with her mindset.

You aren't going to change her, Alice is right. People don't change other people. But you might influence some change. Who knows?

Jam it back in, in the dark.