Yikes....the whole thing sounds like a cluster F. But, I gave to agree with you after that comment.

Karen had a LOT of balls to say something like that about such an amazing mom.

Maybe give her a little time to accept and then check out if your friendship can survive? She may be a little in shock right now over the whole incident and is not in command of her senses. Just maybe you would be the catalyst that helps her see what she is giving up. HER CHILD!!