I have a friend who blacked out once for no reason, he had his license revoked for one year. He went for further examination, given the all clear and then given his license back. This was around 1996 so I presume things haven't changed and she would be under the same rules.
These blackouts do happen, and for the CPS to drop the case it must mean they believe they do not have the evidence to prove otherwise. If witnesses say she sped away before the crash and no brake lights were seen right up to hitting the lampost then it does indeed sound like a blackout or a fit of playstation type rage which I seriously doubt.
Absolute tragedy though, and I can only imagine the sense of injustice felt by the kids and husband.
As an aside theory, does the fact it was a big Range Rover with huge ground clearance have a part to play? If it was a little fiesta would she have been nocked to the side rather than dragged under... sorry for the morbid question but I really hate these huge monster cars.