Thanks for the advice MrsMac and Megg.
I am trying to do the positive reinforcement with her and set up a play date last week with a preschool friend. I explained the situation to her mother and she was quite happy to help.
It was amazing to actually watch the behaviour first hand and to see how the other child reacted when DD was bossy. When I suggested another way that DD could approach the situation, the other child reacted in a completely different manner. We keep trying to explain that that is not how we treat our friends etc etc and are trying to encourage her to not be so bossy with her little brother. Hopefully with time she will learn that she can't be so bossy if she wants people to be her friends.
The funny thing is, I spoke to my mum about it and she said that I was exactly the same as a child. I had a best friend in primary school, but when I hit high school I never really had too many friends. I know how much heartache this caused me, and I don't want that for DD.
Hopefully a combination of teaching and time will see the problem reduced. I am realistic though. She was bossy from the time she came out of the womb and so to a certain extent it is in her nature.
THanks again. Nice to know that others out there have storng willed independant daughters as well!