cutting contact will help your mental health
I keep seeing this as self-help advice and it's completely wrong in my opinion, both for a person in question and for all trans people around them. On societal level, if nobody engages one another things will just slide even worse. And on a personal level, you don't always get to choose open-minded friends. If you just push everyone away waiting for more compatible people, you'll be alone. Poptimism really oversells a strong individual standing alone in a world of bigots.
it also might teach your friend that those jokes hurt, and that her new choices have consequences.
A better way is to not cut the person out but explain it to them, over and over. You cut them out, the lesson they'll probably learn is that they lost a friend to a biblical plague of gayness or something. Engaging is hard, but unless you try, you're doing nothing.
I'm not talking about moral duty or responsibility, I'm just saying the outcomes are better for the person doing the choosing if they engage with the world around them instead of shut it out.
If it's an old friend, then you especially need to make some effort, for your own sake if not theirs. People are using "nazi" and "bigot" as thought-terminating cliches, but in many cases you can have a normal conversation with the person you'd call a nazi for their online output about things not related to your or their identity or politics. You can learn woodworking from a nazi and go on to make furniture decorated with a hammer&sickle instead of a swastika. It's an extreme example, perhaps, but in my view it's also really extreme to peddle this extreme misanthropy as advice to people on the internet you don't know about their friends you also don't know. "Engage with them and try" seems to me like less of an error these days if we're talking generalizations then "cut them off".