Hi OP
I think you've got to tell him.
Until you said she threatened you, I thought don't ruin things over what happened when she was young. But threatening you is not on.
Stay calm. Don't make any statements such as she is still nasty and controlling, stick to the facts. She bullied you at school, she lied about it, and she has threatened you.
I think the risk is that when he confronts her, she will break down, say she has changed, and she loves him so much, she was just scared of losing him, so be prepared he will carry on the relationship with her.
If this happens, I would offer to have a meeting with her to clear the air and agree to put it behind you. And record it. You might be able to remain civil but if she can't be and threatens you again at least you will have evidence.
I'd say to your brother this has brought back old feelings of being scared and stressed but you will support him in whatever he decides and work with her to put it behind you both if they want. Even though that's a very hard thing to practice, it will mean he doesn't feel like he has to 'pick sides' and that takes away her power as it will be harder for her to 'take him away'.
And yes 4 months is far far too soon to make any decisions about proposing, though I'd be wary of saying anything about this as it will sound like the bullying issue is infringing this and if she finds out your thoughts on it, it will give her ammunition that you are 'trying to get between them'
Good luck OP