I found that T's sometimes take everything we say very literally. It appears that your T may have done that with many of your jokes, taken them literally, rather than as humor.

It definitely sounds like your T panicked and could not handle the transference issues. Whether receiving hugs from your T was wrong is hard to say. There are no ethical restrictions against it according to the APA, but in your opinion, you may think it's wrong. I don't think it's wrong at all. What I think is that your T could have handled the situation better and rather than abruptly dumped you, took two or three sessions to address the issue, let you know she could not work with you anymore and provide some sense of closure while referring you to a new T.

As you noted, it is possible that your T may have experienced the same feelings you have once you admitted your transference to her (hence her reaction). It may be that she was worried about the consequences of continuing to work together.

If you are really hurting by her actions, have you thought about sending an email to her, just telling her some of what you told us? For example, letting T know that you are not mad at her, telling her that you are hurt, but understand her actions, and have moved on? Even if she doesn't respond, that may provide some closure for you. It's great you are moving forward and continuing to get help. I'm sure your former T will be able to take care of herself and get the help she needs to resolve any issues she is experiencing as a result of this.

Hang in there....