I'd find it more hurtful to be told directly that my friendship wasn't wanted. A slow fade is bad enough, but at least you can sort of console yourself that you are still friends, just not at all close, but being told outright would be humiliating for me. Both are hurtful, and there's probably really no other way around it than hurting her, if you definitely don't want to see her again at all.
Perhaps you can arrange a date for the future - like for two months time - and then keep referring to that when she asks to meet up "sorry, so many people to see, will see you for that film/play/coffee in Dec"; "sorry, limited time for socialising these days and have to make sure I have time to see everyone, see you later"; "sorry, if I met up with you again this week, there just woudln't be time to get stuff done and see people I need to, looking forward to seeing you for that coffee in Dec"; etc etc. Then she has something to look forward to, but it doesn't take loads out of your life etc.
Thinking of her as a pity friend, and feeling bad about it, doesn't really work if it is true that you are her only friend, because, pity or not, she might need you. It would be easy to start justifying dropping someone by saying to yourself "oh it is disrespectful to her to only be friends out of obligation, because she deserves real friends who value her for herself", if it's the case that she doesn't actually have any real friends who value her, and isn't likely to be getting any. It doesn't mean you have to stick with her, but you have to be aware of that when you are choosing to dump her, and not dress it up in ideas about respecting her to make yourself feel better (Of course, it could be that she could get lots of other friends who would respect her, in which case, it is fine to say/think that about a pity friendship). But it's worth thinking about. Nobody wants to admit that they are dumping someone being it's boring, tiresome, etc. - it's much more acceptable to tell ourselves that it's because it's more respectful to the other person to allow them to make real friends - but it's possible that the person actually needs your pity/charity, and it's good to consider that as a possibility. Even so, you can put limits on what you are prepared to give, and how often you can and will see her. And it might need a direct conversation saying that you have only a given amount of time to do a lot of things, so this is when you can meet up with her, and that's it.
That seems less cruel to me.