Why would you let anyone know she'd been arrested anyway?  Who were you planning to tell?  I guess the only way I'd do it is if I suspected she'd been flipped.  Hmmm, have you considered the "free session" might just be what LE told her to offer her clients so they could be busted?  Maybe I'm just paranoid.  Tell her your fears and see what she says, but be very careful about seeing her now.
PS:  Am I right that she's an indy?  If so, how did she get busted?  If she's careless and unprofessional, that's one more reason to stay away.

You see her, you like her so why would you want to cause more trouble for her?  

I guess I gotta ask, how did you find out? Did you see it happen? Did someone else tell you? Did she tell you?

It's over for her so you should forget about ever seeing her again.  Pull your head out of your butt and pretend you don't know her-  don't send her emails, don't call her, don't do anything except walk away.

I was very nearly in the same situation as you about 7 or 8 years ago.  She served up two clients to LE the day before I was supposed to see her in order to get her charges reduced.  Do you want to be that guy?  She may be your ATF (a term I can hardly stand to hear anymore on this board), but you're her way out of the bust, no matter what feelings you may think you have for her.  

Think you guys!

If no money changes hands-is there a crime that you would get busted for??

What makes me suspicious is _she_ brought it up. I'd decline. If you think she is setting you up, take it to the RO board.

I had a situation where a trusted fave got busted the day before a meeting. The only "clue" was she said she had to "change the location". I went to the meet had a nice time and then checked and found the bust. Later, before the case was heard, I asked for a meeting and she suggested a location in the jusrisdiction that had busted her. I rejected that idea and told her why. No freebies were offered for silence.

I'd know that she was arrested because our pattern of communication would have altered.  I wouldn't tell others unless she was putting them at risk and then only after tearing her a new asshole for being stupid.

But she's on LEs radar now.  Stay away, at least until the dust settles & you can figure out what is what.  If you have never even seen her, I think she's giving you an aweful lot of information.  My first date ladies are no where near as forthcoming.  
If she was busted, she may need to raise cash to pay off her fines, bail, etc.  A wise provider might have a rainy day fund to tap...   But if the need to raise cash, supercedes the need to screen carefully, she could be right back in the can.
A FREE session?  Just sounds wrong.  FREE so she can set you up?  Possibly.  FREE so she can twist you into helping her out with a "loan" (that you may never get back)(that she promises to "work off" but becomes unavailable...  remember she's cancelled on you 2X already).  

Just stay away.  There's a reason this business is CASH on Delivery.