The problem is she would have to knit with something she doesn't even like working with in the first place! LOL I guess it depends if she can stand working with it long enough to make some gift items. Try triple-stranding it for a quick knit.
Maybe pet snuggles like for
Do you think the giver was expecting something to be made for THEM from the yarn, or were they just thinking you might like it and didn't have any expectations otherwise? You might be able to swap/sell said yarn for something you like better, like with someone who found out they are allergic to wool and has lots of wool yarn, or somebody who bought a lot of cotton yarn and found out they didn't like it.