The OP asked about how to deal with it. Excellent question.
In my department, people dealt with it by avoiding the bully. Picture a stream moving around a rock - it was like that. People just worked around her, if possible. Going to management was useless because her husband was in upper management, and whatever manager you might go talk to was well aware of the problem already (and probably had to deal with it daily, too!).
It's a horrible thing to have to deal with, very corrosive and inefficient. I'm the kind of person who takes things at surface value. I don't want to play politics or deal with subterfuge, but sometimes I couldn't avoid it.