You're right. She liked her but didn't like the idea of her real life feelings and relationships being coined as "Yuri." She viewed that term as being belittling and objectifying when used to describe real people. We saw how our MC literally did treat the real girls at the school like manga characters in her fantasies and that's the kind of thing Mika didn't like. So, she responded with that infamous quote because she was attacking the use of the word "Yuri" and how unreal it was. All this without knowing that it might turn off our MC. Because obviously Mika didn't know that our MC was gay then (and vice versa). It's unfortunate for both of them but at least they've reconnected in some way.