@johncarlosbaez have also never heard of it. I mean, sometimes very elderly tenured faculty get put into tiny offices or whatever to "encourage" them to retire, but demotion? I'd think it was very much against the rules. or even messing with somebody's research plan! maybe she had a weird niche appointment originally.
@acm_redfox - it turns out that article was written by someone who doesn't quite know academia. I've now learned a few details and they seem a bit different: she was a research assistant professor paid for by soft money, apparently from other people's grants, and when her research seemed to not be going anywhere those people said she should work on something else or she'd have get a job as an adjunct. That's my impression, anyway.