
This may not be heirarchical but a longstanding problem that has now reached breaking point. You say the older bitch is 'constantly badgered' - how long has this been going on? I have had clients before in this situation, most notably a woman who allowed her younger dog to harass the old in the way you describe until one day there was an enormous fight and the dogs could no longer live together.
Indeed I'm in a similar position myself at the moment with my collie pup - like yours, she is very driven and spends most of her walks showing herding type behaviour, stalking, eyeing and flanking my other dogs. If I allowed her to, she would badger my youngest boy (who is 27" and 34kg to her 20.5" and 15kg, so it's nothign to do with size/stature) relentlessly on walks, and for a time was trying to do the same with my youngest bitch up from her. It's got nothing to do with dominance - it's just a pushy young upstart of a farm bred, working line collie playing in a way that she thinks is tremendous fun.
I've had to work very, very hard at her recall, 'away' (for when she's started to badger) and 'leave' (for when I catch her about to start) cues and gradually, she's starting to leave them alone of her own accord and just run with them. If I were to leave her then one day, there would be serious trouble I am sure. Linc is already not keen on walking past me sometimes as he can see her in front of us stood poised to start annoying him. My friend has already has this problem with her own working line collie doing exactly the same thing with her older collie bitch, and the younger has been injured by the older because of it - and I can tell you from observing the two at home, there is no heirarchical dispute involved whatsoever, it's entirely inappropriate play. Getting spayed will not help it - this needs training.