Removing someone as an authorized user should cause the account to just disappear from that person's credit reports. "Closed" would not be an appropriate status as the account would still be open. If the reason your score is being suppressed is due to high utilization on that one card, then yes it would increase your score once it fell off of your reports. We don't have any specifics, but that card would really need to be maxed out and/or make up a large percentage of your overall credit limits in order to make that much of a difference, though. It really depends on the profile.
As for whether adding her as an AU would help her, the answer is likely yes but again it depends on her profile. Adding cards substantially newer than her existing accounts would likely do more harm than good in the short term. We'd really need to know more about her profile (like the type of accounts, balances, age - closed and open) and age/limits/balances of the cards you're considering adding her to.
