There are several kinds of jaundice.
Inherent jaundice (which can be from a variety of medical or genetic problems) occurs within hours of birth and becomes severe quickly. It is unrelated to what the baby is eating and needs urgent medical attention.
Normal newborn jaundice affects more or less every newborn to some degree and is caused by the bilirubin building in the baby's system as the liver has to catch up to flush them out. Breastfeeding HELPS to rid the baby of this kind of jaundice because colostrum is a laxative and gets the meconium out of the system and the digestive tract moving. Bilirubin is usually excreted in bile, so the more the baby digests, the faster they recover. Breastfeeding frequently and in sunlight (preferably skin to skin with baby in only a nappy) will resolve most cases. Even BFing near a window will do (for the winter babies).
Breastmilk jaundice affects around 2% of newborns, occurs AFTER the 7th day since birth and is caused by an enzyme in breastmilk (glucuronidase if anyone is interested) which interferes with the normal elimination process of bilirubin in the infant's liver. If the mother continues to feed the jaundice will continue and resolves eventually over a period of 1-3 months. During that time the baby will be ill, lethargic, gain weight slowly and have little interest in eating and generally do poorly until the levels have fallen sufficiently for them to recover. If the mum pumps and dumps for 24-48 hours and the baby has formula for this period the bilirubin levels fall immediately and dramatically and normal nursing can continue thereafter.
The danger with jaundice is brain damage, but this is a VERY rare outcome in both normal newborn and breastmilk jaundice. Far more common is a baby who does not thrive, becomes too thin, and ends up behind in their development simply because of the weeks (in BM jaundice) of illness. They usually do not suffer life-long effects.
In the circumstance described i would encourage mum to BF as much as baby wanted to, and let her know that her breastmilk was GOOD GOOD GOOD for her baby. In regular jaundice NO formula is necessary and in breastmilk jaundice ONLY 24 or at MOST 48 hours of formula is needed. I would let her know that 6-8 wet nappies a day meant baby was getting PLENTY of milk and that many breastfed babies go a day or even 3 between bowel movements and that constipation is only a major concern in formula fed babies.
I would offer her support of her desire to feed her baby in a way which her (so-called) care providers didn't, and i would hope for the best for her and her babe

Ultimately i would try not to be angry. Breastfeeding is the best thing for babies, but formula is very very far from the worst.