I can’t suggest a single ‘right’ way to handle this. It depends a lot on your personality and what you feel comfortable to do or not do. If, aside from being annoying and offensive, she is not causing any serious harm, continuing to just ignore her would seem a good approach.
If she bullies others as well then perhaps talking to those other neighbours will help build a sense of mutual support for you all.
Does she have any specific grievance that could be addressed somehow?
Some people like to deal with such people by disarmingly going out of their way to be exceptionally nice to them.
As for doing anything legal. I don’t know but suspect it would have to be pretty severe abuse before a legal recourse would be worth the bother.