When I was around your daughters age, I had a friend that was very similar to this little girl. She was bossy, spoiled, mean, and very controlling of me.. Finally I got fed up, and I told my mom that I didn't like going to her house any more, and I didn't want her to come over. The next time I was invited over, I told her that I didn't want to.. Her mom called my mom, and my mom politely told her that I had decided to take a break from playing with her, and that she was sorry, but she wouldn't force me to play with her if I didn't want to, since it made me uncomfortable. The little girl then wanted to talk to me, and I just told her I was sorry, but I didn't want to play with her because of how she treated me, and I would just play with my little sister for a while. She moved on and had a new friend over within a day.
Sadly, she still remained a bossy girl, and didn't have too many friends.. I wouldn't worry about the other little girl that much. You can pray for her, but you have to protect your daughter. You don't need to tell the other girl's mother off, but you can explain to her calmly why you can't let your daughter inter act with her. I know its hard, but pray for strength and compassion before you speak with her, and the right words will come!