One good story that reinforces one should never do "paid" work for friends. It tilts things on its ear and can even result in the loss of friends.
Give her the low-res files to do as she pleases, but specify, in the nicest possible terms, that the original files are yours and if the client wants them, a fee is expected out of courtesy, if not need.
I have come to the impression that your costs are oustripping what you could reasonably have expected to have earned or been given for this task. I don't know if there was a written agreement (essential for this type of work) dictating what costs are involved, why and the alternatives, and whether she did or did not agree to them. There is the danger, as you pointed out, that the "substandard prints" may be interpreted by others as an example of your work and thus cause more problems. The way forward here is to speak with her, as a friend but also as a client who has engaged a professional, about your excessive costs vs the poor return for same. In a nutshell, she is expected to reimburse you for the costs and a bit more for your time and effort. That's it in black and white.
I did get a chuckle though that anybody could expect a decent print from a 300kb file. That's funny!