Yes, she's the blind man's slave and mother to his children. But she was also Jewish and from among the Jews that took shelter with the Muslims. We know this because there's another hadith retelling the same incident, though there's some variations:

A Jewess used to abuse the Prophet (pbuh) and disparage him. A man strangled her till she died. The Apostle of Allah (pbuh) declared that no recompense was payable for her blood. [Book 38, Number 4349: Narrated Ali ibn AbuTalib].

Its the same incident, but different narrators.

She wasn't oppressing Muslims (Muslims had already been driven out of Mecca at this point in time, and had won the Battle of Badr and established their own community), but she was taking the side of those who were fighting against the Muslims. As a citizen of the Muslim community at the time, she was openly showing her disloyalty to the community, thus committing treason. In the modern day it would be comparable to a person showing their loyalty to ISIS and hating on America. In the US if a person was even suspected to be affiliated with ISIS, they're taken away. In the case of this woman, she wasn't just a suspect, she was repeatedly affirming her disloyalty towards the community that she gave her loyalty to and openly encouraging violence towards Muslims.