"as I don't think this person would relish the idea of getting involved in payroll taxes"

But that should have existed all along, for a Corporation. That isn't new, just because there were years without activities.

"knowing that she may never have another sale. If I were to go that way, would I do 1099s for 2021 AND 2022?"

You cannot send a 1099 to yourself from your own entity unless the work you did was for some different business you run, providing services to your own other entity. Remember the Corporations are "people" according to the Supreme Court. She is that C Corp's employee for the work she does that is their operations.

Dividends are paid to shareholders that do no work for the entity, but have an ownership holding of the stock shares.

Perhaps the two of you need to get together and decide how to close out this Corporation?