While it does seem like a psychological question and doesn't relate to methodologies, I don't agree it's a dead-end and you can't change how people behave. But first you need to understand the underlying reasons for such behaviour, could be:

• She doesn't think others will do a good enough job
• She wants to make things quickly and believes that while others are capable of doing a good job - they won't be fast enough
• She doesn't want to seem (e.g. to her boss) useless
• She likes to boss around, image and whatnot

Once you understand what underlies this "domineering" behaviour you can try to come up with a plan to fix it. Some solutions that may work for some people:

• Ask her to give more control to one or two of your best people. So that the risks (to fail) are low. Work for couple of months in this mode and then start expanding. If she doesn't believe that the result will be of good quality, then any failure may be a throw back. So take it slow, make sure the team is actually capable.
• Try to put more work on her. E.g. talk to higher ups, maybe they can give more projects to her. This results in either of 2:
  • She won't have enough time to follow your progress and thus will give you more control (your win)
  • She'll simply work more and will try to keep dominating, but now since she has more on her plate she'll become more irritable (your loss).
• Someone from the team can study a part of the domain, talk to users, stakeholders and become a better expert in that part than her. Such person will be equal (or close to it) to her during discussions on that particular functionality. This way she may be more eager to entrust it.

Anyway, I'd experiment. But I'd also be careful not to overestimate the team. You keep hearing about self-organizing/self-managing teams as if it's a good thing and we should strive for it. But most of the teams (at least from what I've seen) aren't really capable of being self-organized. And moving in this direction may drive away people who're actually capable of doing a good job (maybe it's your PO).

While it does seem like a psychological question and doesn't relate to methodologies, I don't agree it's a dead-end and you can't change how people behave. But first you need to understand the underlying reasons for such behaviour, could be:

• She doesn't think others will do a good enough job
• She wants to make things quickly and believes that while others are capable of doing a good job - they won't be fast enough
• She doesn't want to seem (e.g. to her boss) useless
• She likes to boss around, image and whatnot

Once you understand what underlies this "domineering" behaviour you can try to come up with a plan to fix it. Some solutions that may work for some people:

• Ask her to give more control to one or two of your best people. So that the risks (to fail) are low. Work for couple of months in this mode and then start expanding. If she doesn't believe that the result will be of good quality, then any failure may be a throw back. So take it slow, make sure the team is actually capable.
• Try to put more work on her. E.g. talk to higher ups, maybe they can give more projects to her. This results in either of 2:
  • She won't have enough time to follow your progress and thus will give you more control (your win)
  • She'll simply work more and will try to keep dominating, but now since she has more on her plate she'll become more irritable (your loss).
• Someone from the team can study a part of the domain, talk to users, stakeholders and become a better expert in that part than her. Such person will be equal (or close to it) to her during discussions on that particular functionality. This way she may be more eager to entrust it.

Anyway, I'd experiment. I think it's crucial that the team understands the domain very well for this plan to succeed.

But I'd also be careful not to overestimate the team. You keep hearing about self-organizing/self-managing teams as if it's a good thing and we should strive for it. But most of the teams (at least from what I've seen) inherently aren't capable of being self-organized. And moving in this direction may slow down the process and consequently drive away people who're actually capable of doing a good job (maybe it's your PO).