Instead of crating then, create for her a space in your living room, with a shortish lead that you can tie her to when she gets overly obsessed with the kitty room. This way you can also teach her the cue word "bed". lead her to the lead (which will be tied to something 'anchored' down, and have a cozey blanket and interactive toy (like a stuffed Kong) and maybe some other chew toys, to keep her occupied.
Her behavior is definitely NOT something that would fly in my home, because I occasionally foster young cats\\kittens, and I can't have a dog that will be obsessed with them, and possibly chase them, so I manage the dog, and teach them to 'relax' at the same time. Most of my dogs have been able to be crate trained, but if you can't do this with yours the leash will have to do. Either way, you need to put the brakes on the obsession...her nervous behavior is not healthy for her, and you as the leader need to show her that she doesn't need to be worried about those kitties.
She "Could" be reconditioned to a crate too, but that would take time in itself, and dedication...so I won't go into the steps...but it can work...I have rehabbed dogs as bad as her about crates.