You are absolutely right. This is unhealthy for her and dangerous for you. You are only 14, so you can’t expect yourself to be able to handle this on your own. Regardless of age, it’s never healthy for someone to be another person’s “only”. It’s very hard to pull away from someone like this due to worry about what she might do in response. None the less, you can’t stay in this strange relationship for your own safety and peace of mind.
To be safe and to feel okay about withdrawing from this girl, you need to turn her over to someone who can help her in ways you can’t.
I suggest you ask your school counselor for help. Share your letter to me to fill her in quickly. The counselor may be able to intervene directly by talking to the friend. If that doesn’t work, she has the professional obligation to contact the friend’s parents. In order to get her the help she needs, her parents do need to know how troubled their daughter is.
Do talk to your parents. Sometimes it helps when parents agree that a teen can tell the “friend” that their parents have forbidden them to see them anymore. Yes, she’ll try to get you into an “us against them” scenario but you can tell her that at your age you really have no choice but to do as your parents demand. I can’t promise but, if your parents agree, it might be a strategy to try. You know this girl well. I don’t. Be wise. Only use this approach if you think it will be helpful.
Your parents may also want to protect you by talking to her parents or to school authorities. Don’t object. It’s their job to keep you as safe as they can. It’s okay for you to reach for parental support. Really.
However you try to withdraw, she may freak out and trash you to everyone she knows. Be strong and remember that none of this is about you. It never has been. It’s about her illness. Take the high road. Don’t trash her back. Don’t get involved in defending yourself to her. That is just another form of this toxic relationship.
Friends who know you won’t believe what she says. Just tell friends who ask that the relationship was too exclusive for your comfort and you needed space and time to be with all your friends, not just her. My guess is that most of your friends will understand.
If she threatens to hurt you, by all means go to your parents and the police if you have to in order to ensure your safety. Unstable people sometimes do harm others. Trust your instincts and don’t take unnecessary risks. You deserve to feel and be safe.
I wish you well.