See, I would have responded by very loudly, yet firmly, telling her "Don't you fucking threaten my child, you psychotic bitch!" Immediately, IMMEDIATELY take it up to the maximum, make that statement everything that the crowd will remember. if/when management is sorting out who to remove from the store, you want everyone to say "Everything was going normally, next thing I know this guy is getting between the little girl and a woman who I think threatened her." If you go by inches, she'll definitely make some shit up about you, so don't give her the opportunity.

Cobra Kai, man. Strike First, Strike Hard, No Mercy.