You're not alone Rex. McDonald's has every legal right to do this.
Not to get political, but a legal right does not equal a moral right. If anything, I think this example highlights the absurdity of such laws. For a business to trademark a prefix that would preclude people who have a name with that prefix from using it on their own is silly.

In fact, the very idea of holding exclusive rights to a name itself is silly. If your name is John Smith, should you be able to trademark your name and sue anyone else named John Smith from using it? It seems to me that this is a classic case of a corporation using its money to wield the force of government for their own selfishness. And while they may have a legal right to do it (the ruling, if it comes to that, will settle it), it's still stupid and immoral in my opinion.

If they do have a genuine concern about people associating the McFest with McDonald's, they should simply ask her to put a disclaimer on her advertising literature to state that it is not affiliated with the McDonald's corporation. That's reasonable. But trying to ban her from using the name McFest (which is not even a name they've ever used for anything) is just corporate bullying.