I'm sorry that this is happening to you, and it makes for a really stressful job situation. That being said you need to be proactive about creating and maintaining your job security and pleasant atmosphere. You shouldn't have to give up a job you love for "CrazyMary".
We can't assume what management is going to do. They are afraid of "CrazyMary". At this stage document. Document, document, document. Keep a file. See if you can go back and write up all the dates and encounters you've had with 'CrazyMary". Start start looking at your HR options, because what you've suffered is ridiculous. Start reporting it. Just be honest....you can send the email the way your FI suggested, or you can modify it to say "This is what happened, I felt very intimidated and threatened. I was isolated by "CrazyMary' and put into a stressful position and I became fearful and emotional, BUT at the close of the encounter/discussion, EVEN though 'CrazyMary" has denied any culpability,WE have agreed to disagree, and actively work towards a respectful and professional work environment. I suggest that management act on previous concerns of myself and other employees about "CrazyMary", by looking into a HR training day (communication, respect, accountability, taking responsibility for actions, etc), which I feel will benefit the entire staff and facilitate higher productive attainment. etc."
You don't have to CC "CrazyMary", but if you do , you do not have to down play it. That's the worst thing you can do, because it implies that:
a) You're willing to take the abuse
You're saying it's not as bad as it seems, and you'll end up invalidating legitimate concerns. When you down play these encounters, it ends up sounding like whining - which it isn't! You are being harassed by a toxic work mate. Hold her accountable.