Hmmm, honestly the first thing that came to my mind is the phrase, you need to pick and choose your battles.

I have bitten my lip in such situations I have found myself in all on account I wanted to avoid a confrontation. However, this is slowly changing as I am becoming a little more assertive. I suppose you could accuse me of being passive aggressive but I at least am feeling better for having said something at all. You need not in this case confront your coworker. It could be good enough to simply state you don't wish to be drawn into an argument or would much rather remain impartial. This may give the coworker the message she is overstepping while at the same time avoiding an all out confrontation.

I can think of a litany of situations and events in my life where I wish I had been more assertive, where remaining passive was not the solution to the problem at all. I would much rather have had the gumption to have been more assertive.