Funk,
If all your doing is using it for google PR, then why not compromise, and give her the domain back, but make her link somewhere as you direct? The link can be fairly hidden surfer-wise of course.
Obviously not nearly as good as directly having the domain and exploiting it off the bat, but the added boost it could give the PR to your other domain would be at least something.
Then you know she's serious, and not just trying to scam you. And you don't have to feel like a jackass.
My annoyance right now is trying to come up w/ a simple name for a company that the fucking domain(s) are not taken. CHRIST. All those stupid fuck search engine scams have nearly anything good. Why didn't I just blow $100k 9 years ago and come out way on top? pfft.
-Phil