For some reason...I still haven't fought her...
I don't know if she appears in the story mode or not, but I do know I'm kind of a coward to try the score attack (The "top-tier AI" thing scares me.)
No reason to fear this time around. This game, difficult settings can effect score attack, you get continues, and even if you lose to Parace (and you will several times) her health gets chipped down bit by bit every time. An easy way to do it is just pick simple mode Kira and spam her grab piledriver thing. Most of the time she'll kill you before you can even do -your mother is a classy lady-, but every time you do get it down, it knocks off a pretty big chunk of health.
And if you do do the easy difficulty thing, everyone leading up to her is a joke.