I suggest that you do tell your boss because otherwise she might get upset at the news coming from the other department and would be more apt to negatively comment about you. If you can prove that she is causing problems in your department you should contact your HR rep and see what they can do to help. Also, you have a right to see your employee files, so you can request a copy, as well as add comments regarding anything in there (although not remove anything from the file), so you can help secure a fair review from the department you are seeking to transfer to.
I am very familiar with office drama. I interned with a state agency this summer. Try also having drama on the legislative level from politicians with there own agendas as well as the usual office crap. You learn a thing or two.