How about doing both, a bike lane and a memorial? I think it weird that is the response you received. I see several motorist or pedestrian death roadside memorials with stuffed animals, balloons, crosses, huge signs, etc that's a lot of stuff on the side of the road that eventually gets strewn about the area but a bike painted white with a sign being seen as trash? Not saying that a motorist's death or a pedestrian's death isn't equal in pain and loss to a cyclist's or that their lives are not equal to that of a cyclist's, I just think that's weird. Hmm..
Or, have you thought of a share the road sign? I think something needs to be done considering the amount of accidents in that area and the horrible death of this woman.