Justice Betty King said Margaret Uttley, 52, had a viable defence that she shot 45-year-old Stephen Henry Uttley in self-defence during a struggle early on October 11, 2000, after he came at her with a shotgun.
Prosecutor Ray Gibson said in opposing bail that Uttley had falsely told family and neighbours that her husband had left to work in the Northern Territory.
Instead, Mr Uttley had been buried in a "shallow" grave, and his body later exhumed and burned, Mr Gibson said.
He said Margaret Uttley told police in 2007 that she awoke at 2am on October 11 to find her husband pointing the gun at her.
Mr Gibson said there was no history of domestic violence in the relationship.
He said Margaret Uttley also told a friend: "If I could shoot him and get away with it, I would."
Uttley has been charged with murdering her husband at the family farm at Tarneit, north of Werribee.
Mr Gibson said police telephone intercepts showed that she was trying to implant memories with family members - about their whereabouts at the time of the killing - that supported her version of events.
He said Uttley suggested the shotgun blast that killed her husband did not wake two teenaged children who were in the house at the time.
Justice King said material before the court showed Uttley was a non-violent, quiet, and reserved woman, who had done everything for her husband during their marriage.
She said Uttley had a defence, which, if accepted by a jury, would result in an acquittal.
Uttley had significant community ties, including family, a house and a job, Justice King said. She had no previous convictions, and had not committed offences in the period after the killing.
Justice King fixed a $100,000 surety for Uttley, and ordered her not to talk to her children about the case. Uttley was to live at a Werribee address, report to police three times a week, and surrender her passport.