I'd say give her space. I may be alone in this thinking but hormones don't give anyone the right to behave that way. Yea I have them too and I know I've been witchy at home but to scream at a neighbor for seemingly nothing?
Leave her be, do what you want with YOUR property. I'd certainly congratulate them if you happen to run into them outside but I wouldn't even discuss the yard issue.
I totally wouldn't spend $ you don't have right now to make a raving lunatic happy. No way, no how.
If you feel bad not acknowledging the baby send over a card. If you're feeling really nice maybe some cookies, but only ones you were going to bake for yourself anyway.
Frankly, hormones or not, she had no right to scream at you like that. I don't think hormones or bad days make behavior like that OK- but if it does happen it doesn't mean you can just sweep it under the rug. She should totally apologize.
If someone screamed at me like that I would be tempted to NEVER mulch with anything but leaves.