Is she aware that her DD is like this? What does she do when her DD is being awful to your DD, does she say anything? If not i think its probably best to some how gently tell her. Its an issue she will face when her DD hits school, if its not stomped on now then she will have even more challenging behaviour to deal with later on.

I find it hard to keep my thoughts to myself. I have a friend with a DS who is almost 5 who can be very rough and quite mean to my DD and i find myself snapping at him and saying no a lot to him. My friend as far as i am aware doesn't have an issue with it.