I'm in the middle of something similar but less important; at the end of my garden there is a similar poisonous old trout whom I hate with a passion (an I don't hate anybody normally). A few years ago she had a lovely tree cut down on the boundary claiming that the tree surgeon said it was 'diseased' and could fall down and hurt her shed, or something, all bollocks, she just wanted it gone. This is the same tree that used to drop large fruity berries on my lawn and looked lovely, I never did get around to finding out what breed it was but it'd been there a long time....I digress.
Two weeks ago she started having work done to landscape her garden, the 'fence' between us is a very old twisted Hawthorn natural hedgerow and cannot be destroyed, over the years someone added an old farmers gate, some twisted logs/trunks and it looked rustic - I liked it but 'she' didn't. She asked MY WIFE if she could have the 'tops' cut from the Hawthorn but the chaps will need to come around our side to gain access which we thought would be OK (she's done this before).......I get home from work and they've f*cking massacred the hedge and now there's BIG gaps and I can see straight into her shitty house, they basically left 'stumps' with a few measly twiggs poking out - NOT HAPPY.
She's now put Trellis panels there which look absolute sh*t and has compromised the security.....THEN she asked if I could redirect the beam of light from my nifty LED floodlight which she hadn't previously seen....which is now causing HER a problem

I did this ok.
Sorry, I've not told anyone this yet, you've born the brunt, my point is I wish I'd have said no in the first place; people like this do things to suit THEM only and there's almost always an underlying case of 'doing one over' on you or 'getting what I want'. I understand that a party wall must have an agreement between both parties, this has to be drawn up by an independent specialist surveyor (at your neighbours cost) and I also think you can insist on YOUR OWN surveyor and SHE will have to pay for that too (imagine the fun now). Be worth doing lots of research before you commit, also consider whether this 'ere wall will be of any use to you in the future, if you do build off it then you're connected
again to her house (noise flanking etc) I suspect the only reason she wants to barge over a bit into yours is to gain a few inches of floor space or to save on cost.
Something else to consider is if this goes ahead now and you want to build close to or connected to her wall later then SHE might get all shirty about it and cause you a lot of cost in resolving disputes, like I said this is likely to have been suggested to you to suit what SHE wants at the moment. If you fall out after your kids have spent two summers kicking a ball against her new wall it could turn a bit tasty.
Have you seen this:
https://www.gov.uk/party-wall-etc-act-1 ... troduction