I am horrified by your story. She's a LAQ, but it really sounds like she didn't know what she was doing and thought she could get practice on your quilt and get money from you at the same time.
Friend or no friend, I would explain how unhappy you are and that kind of treatment is unprofessional! Once you pay her money, she is no longer a friend but a business person, and she cheated you out of what you paid for. I'm sorry if this ends a friendship, but she didn't do you any favors and if anyone asks about her business, I would steer people away from her.
Your experience reminds me of the phrase: "With friends like that, who needs enemies?" If she's a real friend, she will do what's right to fix the ill-will she's caused.