I suggest you cruise on over to
kvetch.indiebride.com for help. LOTS of women go through this kind of thing... there's a whole forum there on Bridesmaid issues.
Personally, I agree with everyone else: be honest with her. If you ask me, it was completely rude for her to invite herself to be your maid of honor, and it shows a disturbing lack of respect for you and your boundaries. I would be pretty offended if any of my girlfriends had said something like that; they'd probably be uninvited to the wedding itself.
But that's just bitchy ol' me.