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I second the oil wrestling.
But seriously - I'd try for some passive agressivism. Everyone knows psychological damage lasts longer than physical damage
Next time she starts nitpicking your stuff, do the same with her, only start every sentence with "The same could be said about you. For example..." And you have to make sure you do it in public, otherwise it won't matter. The idea is to make it sound as if she's criticising herself, and to get everyone else to agree with you.
And I'm not joking around either. If logic and reasoning don't seem to work with her then she probably has some serious problems. Some social pressure/social embarassment might do the trick. As someone stated above, physical violence might make her even more determined to go after you (as it's already been established she's not completely there). Besides, it could have serious repercussions on yourself.
So yeah, psychological damage. Ruin her life permanently while emerging from the situation without a lawsuit!
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