I have been well aware for more than a year that she is experiencing "auditory hallucinations" and that this is "a major signpost of serious mental disorder, as in psychosis".

There are, however, degrees of psychosis.

My point was that you cannot just charge in, insensitively, and tell someone that the voices they are hearing are delusions, or auditory hallucinations, because:
(a) it does not help in the slightest;
(b) it can be dangerous;
(c) it can be extremely upsetting and alarming to the person;
(d) it is very likely to break down trust in the relationship with that person (and a friend whom that person can trust is one of the most important factors in helping the person to recover).

If you are so clever, what do you suggest I do?