If you have a gut feeling you should follow it but I would be wise about it.
Can you see messages on your husband's phone? I'm not saying pry but it depends on your relationship eg if your husband is fine with you looking. If there is anything untoward then it will confirm your suspicion. Eg if they are texting beyond limits, and you don't know this but go and say to him you dislike her being overly friendly and don't want her to visit, he may resort to their chats and work behind your back.
If they aren't over the top friendly via texting and it's just when she comes to see you, then you know that your DH is being pulled and he's falling for it. You can put a stop to this by telling him how you feel or, I think is a really good suggestion by someone earlier which is to act normal to DH and cancel the visit and if he ever asks, just say you drifted apart.
One thing I've noticed with some women is that they feel they owe years of friendship to the person being disloyal to them by allowing them to come and trash their life just because they're an old friend. No. Friendships change. Overstepping boundaries means putting an end to it. Save yourself the misery.
I'd suggest taking these steps because if there really isn't anything going on then you won't look silly by if there is, you can make a decision to either leave your DH because he is taking you for a mug, work on your relationship and cut off the so called friend, or continue as is with boundaries.
I'm not sure why people call you names for seeing things with clear eyes. Even if eg I had a friend and we socialised as couples, however I talk to my friend all the time but not so much her DH and he came by. No way would be sitting there gushing there and running his fingers through his hair brushing it back and only focusing on me even if he had a catch up with DH earlier. It would be a 3 way conversation to respect everyone in the room, even if it was focused more on me and what I've been getting up to.
You aren't paranoid. It's basic respect. When you turn the tables it looks so odd for a friend's DH to be doing that so why does it give some women a pass to be like that?
Just move on from her and don't make a big deal of it at all. Seems the best way to go.
Also yes it is weird that precious holiday time he wants to use on her. What, for you to sit on the side and be ignored?
If you want peace of mind, find out what is their text/phone contact like? If nothing then the rest is easy. Pretend the friendship has fizzled out and move on. Make plans for when you expect her to be passing by or staying over. Don't allow yourself to be disrespected. Your DH also needs to learn his own boundaries. He should have felt uncomfortable and taken a few steps back and included you in the conversation. If three female friends were meeting up and 2 had spent the day together and talked on the phone all year, it doesn't give a pass to exclude one of them when the third friend with less contact comes along does it? It's as basic as that and nothing to do with your friend being female and your DH a male even. That's just basic respect.