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I would start looking. The market is awful and you should get a head start on your search as your current work situation evolves. No point in waiting. Both can happen simultaneously
Make her call the shots till she hit the wall and realize its better to leave you do your thing
The worst part of this is the friendship with and protection from boss. Leave or wait it out, if you think future will be worth it.
Mentor
I know better than to believe things will magically get better, especially with someone being friends with the boss. I’ve seen entire F500 business units taken down by incompetence because the boss refuses to sack his buddies who can’t do the job. The market is just so bad where I am based right now and I simply don’t have options, which is ironic because I legitimately work in AI systems development which is meant to be bleeding edge. So with all that as backdrop- I’m not an expert at corporate sabotage but I’ve seen it done and I’m looking for any tips on what I can do here. Especially given the person is unfathomably stupid and I have tons of written evidence of her crossing a line.
I’m in this situation now except my boss is much more reasonable. But I’d say start looking now as it may take several months to land a good position.
Start looking and try to leave before she blames you for something she does wrong