Dillin and Cuidera bring Killer Shark and Lady Blackhawk together for the first time in Blackhawk 170 (March 1962).
The Blackhawks really do take secondary status in this story. Killer Shark has a device that allows him to control fish, and has discovered an underwater volcano, with volcanic fumes that turn ordinary fish into giant monsters.
The team split up, some hunting Killer Shark, while others search for the cave. Lady Blachawk winds up being the one to find it, and as she dives through the vent, the fumes transform her into a mermaid.
As a mermaid, Lady Blackhawk is able to command the fish better than Killer Shark can, and uses the giant creatures to seal up the volcanic vent. She sees that the fish naturally return to their normal forms after a while, so is not concerned about her mermaid state. The Blackhawks disguise one of their submarines as a giant fish, and Lady Blackhawk guides them to Killer Shark. As goofy as it is, it's really one of the better tales in the last few years.
Lady Blackhawk takes a break after this, and is not seen again until the following year, as is Killer Shark.