Hi prairierose, I am sorry you havent gotten any replies to your post so far
... I think it is a little difficult to comment on your situation without knowing exactly what the situation was that transpired to begin this all. I am not asking you to reveil it, just that it is hard to say without knowing your work situation.
Having said that, I will tell you that I worked in mental health for 11 yrs and was in management position for a great deal of that time. I dont feel that your being paranoid at all. It seems that your boss is covering her behind for whatever reason (I dont know?) and you are indeed bearing the brunt of the fallout by being closely supervised, and having all of your actions documented. Is there anyway you can talk to HR regarding this? or can you transfer into a differant position out from under your current supervisor? I will tell you that never should your supervisor discuss you or anything about you to another employee so if you do feel that this is happening you should report it to HR or file a grievance. I am sorry that your in this position...people shouldnt have to work in these kinds of conditions.