J.H.
K.,
Why not try plain old honesty? I know that sounds strange, but this way, you will not feel trapped, guilty or like you need to avoid future invites. A super nice mommie like this child has, understands and knows her child, it may not surprise her.
Let the mom know that you think very highly of her and because you do, you must share what happened when you talked with your daughter about the playdate.
Try telling the mom that when you mentioned the playdate to your child she became apprehensive and informed you that this child does not play nice. Ask the mother if that has been mentioned by anyone to her before. Tell her that you usually let your child pick the play dates but you are willing to come along so that you both can observe to figure out if there is something the two of you can adjust. (If you want to give it a try.) If not tell her that play dates should be agreeable between the children, that you are sure that she would inform you too if the shoe were on the other foot. Be nice, I am sure that you will, and stand firm. You want to protect your child, and you can avoid future bangs, bruises, breaks, hurt feelings etc., for you little one from this other child. Leave this door open, as the children get older, you may have to walk through it again.
It's okay to say no. It's okay to be honest.
I hope you find a resolve for your dilemma.