Awkward Situation at Work - What Would You Do?

Would love opinions what to do. A close friend of mine, pseudonym of Sue we'll say, just got a job as a Director in my IT department. There are about 10 Directors, so the chances weren't high she would be my direct manager. As it turns out, my old manager is transitioning her workload to her, so not only do I report to her - now, I suddenly have 3 projects under her and 2 SIGs that I manage of which she is the director champion. Sue started the company 15 years ago, 5 years after me, I'm 5 years older and I've always been her mentor both personally and professionally - mostly personally - her personal life has always been a shambles she keeps well hidden from work. About 3 years ago she started to get this unbearable better than you attitude, ultra-judgmental to the extent of being a complete turn-off and so phony that I came to not really like her that much, although we go back so far, I can't just drop the friendship we had, so I decided to overlook the parts I don't like because after all we're just friends and I don't have to see her everyday. Also, this is the person that doesn't need to apply for a promotion, she's offered positions, she doesn't need to meet the criteria to stay in a position a certain amount a time - they make exceptions, she has no education - am I jealous? - I've examined this and I am not - I don't like the phony work persona and I'm mostly frustrated that she has things given to her while the rest of us work our tails off to keep a job and work within restrictions that seem to have always been invisible to her. How do I face this, just let my personal feeling go and get over it, request that I be removed from working for her due to conflict or integrity issues (without going into details of course)? I'm unsure how to handle and would appreciate any advice.

please help