prep, its about more than just the job. if you allow this person to bully you and trample over you and get mgmt to try and reprimand you, without swinging back, you lose something of yourself. I'm not saying be a bitch; I'm saying for your psychological well being, you can't allow someone who was in the wrong in the firstplace to use you as a doormat.
and it will give someone pause in the future to try and take advantage of you and use you as a target for their own mental weakness.
trust me; I know what I'm talking about. Once people get away with pissing on you once, its all over.