Great. But DID you copyright your design? You can't just say "this is mine!" and expect her to remove her item from her shop. It's a legal process. A long and sometimes expensive one. You'd know if you had one, is what I'm trying to say.
I truly am sorry this is happening, but if you don't want it happening, you could try to get claim rights to your design via a good lawyer. Then, if someone tries to copyright you, your lawyer deals with it, not Etsy. Etsy doesn't get involved with those things. It's between you, your lawyer, and the copycat (and possibly their lawyers).