It seems like your boss did the all right things:

1). Initially acted in good faith and with patience towards your co-worker, giving her the benefit of doubt.
2). Confronted her when it became necessary.
3). Based on her reaction, gave her the cold shoulder, not giving her the power for more drama.

Your boss may not be substituting cold shoulder for confrontation. It may just be about avoiding endless going back and forth with someone you can't reason with. With some people, the more you try to explain and clarify, more they want to refute, challenge, and argue with you. With others, they sincerely want to have a discussion in order to solve the conflict or empathize with your feelings. A lot of times, someone's reaction to a confrontation will indicate the next step you need to take in dealing with that person.