eviemc, first of all, I want to tell you that I truly appreciate the thoughtful way that you asked for feedback before moving forward. I hope that the way you and she have decided to proceed will be successful and rewarding for both of you.
I have to say that when I started going through this thread, I was on board with everyone who was suggesting that saying nothing and showing her a healthy example was the way to go. But then I really started thinking about what it means to be accountable to other folks in a weight loss group. I think an important part of the group dynamic is to develop an "action plan" at the very beginning. If possible, facilitate a discussion where the members of the group can put on the table what kind of support they need from the other members, what is okay and not okay to say and do, and what all members expect from each other in their individual quests to stay on track. For example, if your friend had said "when you see me getting off track, please invite me to exercise with you and remind me that you love and support me" or "please give me some space" or "please ask me about what is going on in my life that is detracting from my success" then you would know what is safe and appropriate.
Your caring and love for her is clear, and I just bet that she knows it!