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This sounds sooo familiar. Do you know if she is taking narcotics for the back problem? If so you probably can't convince her to turn the crazy down. I lived with someone who took prescription narcotics for pain. The drugs made her obsessive and paranoid and - sometimes - aggressive.
I like your plan of paying her leave early. Get her out. She could hurt someone or do something stupid and costly that would take you years to recover from.
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