You let it run it's course, but DO NOT SUPPORT IT. Set boundaries that are healthy for YOU. PuppDogTails has good insight. Search out his posts.
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Do I sit idlely (?) by
Take actions when your bondaries are crossed.
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and let it go on its merry course
You have no control over the other two. Just yourself. Control your thoughts words and actions.
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while I try to be the best father I can be whilst trying to rebuild myself.
BE the best father and YOU you can and focus on growing in both areas.
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How should I interact with her while this is going on? Short and cold w/o any compassion. Or like a next door neighbour.
I am currently treating MsR2C as a "Love and Logic" child (good book by the way). Compassion and Empathy followed by choices. I observe her interactions with me, delay my response.