I agree that it was her responsibility to inform you prior to starting work if there were ANY issues that would have prevented her from completing the work as agreed. A professional will know with out doing too much inspection if a top has issues.
When I drop my quilts off . The very first thing that is done is to unfold and inspect. Doing this does a few things... opportunity to discuss design of quilting ...and the LA gets to review for any issues in the top prior to doing work.
What happened was unprofessional at a mimimum. I would stop payment if possible. If she truley felt that she could not properly do the work to completion , the responsiblity fell on her to tell you the limits of what she could do PRIOR to starting.