Your in the wrong this time big fella. She pays her fees just like you. She may not know gym etiquette, its up to gym management to post a sign stressing that the squat rack should be used for squats.
If no such sign exists, its just another piece of equipment for her to use as she wishes.
If you dont like it, do what I did, set up your own place.
What she did she did through ignorance with no malice, you reacted poorly, hope shes not married to a 160kg Maori lol