Thanks for the advice y'all. I haven't updated, because I'm still reelling from the side Linda showed me and writing it down makes it seem unreal.
Anyways, for the event in question I went with option A and told Linda that it was her event to arrange and if she wanted to invite Jane, she needed to handle it.
However at that happy hour with just Linda and I, she started saying something racist. I cut her off and told her I was offended and to please change the topic. Her response: "Why? Are you one of them? You don't look mixed!" When I said that it was offensive regardless of my background, she teased me for being an overly sensitive, PC whiny baby. I put money for my drink on the table and walked away.
So, it looks like Jane isn't going to be the only one dodging all of Linda's invites from now on.