I'm squeamish and uncomfortable going to the bathroom to test and inject insulin so that innocent bystanders in public won't feel squeamish and uncomfortable.
Personally, I think the question and response are not inappropriate. If she is squeemish she can ask to be moved. But she certainly should not be allowed to compromise the workers rights to reasonable accommodation to test and inject when needed.
Personally I also think it is a two way street. If someone get's squeemish I am all to happy to tell them I am about to inject so that they can run off to the bathroom.