YANBU.
I distanced my DS from another boy, and so myself from his mother, for behaviour like this. DS and the other boy are both four.
It was exactly as you say, every time the boys were together the other boy was hitting DS, often with his mother watching and although she did tell him to stop, it was a disinterested sort of telling that she never followed through with the consequences she threatened.
This boy also lied about odd things, such as hearing DH call DS or having sweets in another room, to trick DS into leaving the room I was in with his mother and once they were alone he would do things like stabbing DS in he face with a fork, hitting him with objects or locked him in a room to stop him going to the toilet. And he was telling DS not to say anything about it.
Finding that out was the moment I decided to stop the boys playing together out of school, so we declined all invites to his house and didn't invite them to ours.
I don't think any of that is normal or excusable as kids being kids. DS has never done anything like that to anyone. And none of his other friends hit him or each other when they come to play. It's just this one boy.
So YANBU, let her bitch if she likes. If they have the other boy over to play I'm sure they will realise why you are cutting them out and will probably do the same if she doesn't do anything to stop it.