I am really sorry you are going through this. But please remember that this is a public forum, and pretty much anyone can read it-- even if you had marked it "private."
Did she get an instant download, and thus has already received the files? If so, I'm sure your policies say there are no refunds in this case.
Although you feel she's been nasty, you could still just say to her, "I've taken some time to step back and look at this situation. It hasn't been a pleasant one for either of us, but my main concern is that you are happy with your purchase. I'd like to offer some assistance to help you set your blog up using your non-refundable template..."
Your health issues are understandable, but truthfully, many people could not care less. Do everything you can to set your business up in a way that, even when you have personal issues, you are still able to keep things going in the way you state you will in your listings/policies.
I think replying at 3 a.m. may not have been the best thing to do. It almost reinforced the notion that she has access to you whenever she wants.
Even though you've responded to her at least once with what you feel has reduced yourself to her level, try to rectify it. HOWEVER, if you feel like she has become verbally abusive, and you've already fulfilled your end of the sale, then report her to Etsy.