If I was leaving somewhere soon and had such a foolish boss (she does sound rather pathetic, sorry !) I'd be looking forward to advancing a couple of fingers in a victory sign ... unless there is the remote chance that you will need a reference from this silly woman.
I have always found that someone who *intimidates* others, ie is a bully, is actually a very weak character and if you stand up to them (even just by saying no to some daft suggestion of theirs) they will simply cave in..
Sounds to me like you are better off out of there anyway,,,, what a bonkers way to run a business - based on who the boss likes....
OK, if you think you will EVER need a reference from this silly bint, then just be pleasant and bide your time until you leave... other wise... hehe...