I've never seen anyone do this, except my sister, who is hardly the model of couth. Her best friend was a type I diabetic from birth, and even with that, I have MAYBE seen her inject herself a dozen times over my lifetime, and she was practically my second sister for years, spending all her time at our house.
I have to test for blood sugar (on a medication that can cause fluctuations) and I do it somewhere private if at all possible - my cube, the bathroom, my car - and if I have to do it somewhere more public (like at dinner out somewhere) then I try to use a body part I can see easily (like my forearms, if possible) and keep everything as close to hidden as possible.
If I was injecting insulin, I'd be doing it in the bathroom, or if I couldn't for some reason, at least being as discreet as possible (lifting as little clothing as possible, and turning my back to the room so I had some visual privacy). It sounds like this woman was just not cognicent of where she was, or just didn't care. Definitely rude, though, unless it was a true emergency.