I find her note to be absurd! I know a longarmer, and have asked about distorted tops before (and I'm not saying that yours was before you gave it to her), and she regularly works miracles with customer's tops that don't lay flat or are distorted. I also know that she regularly quilts tops made of horrible quality fabric. I'm sorry you had to deal with this.
I agree, try to square it up as much as possible, and use heavy quilting. I would also stop payment on the $250 if you can.