You did ask for an opinion, so here it is. Two weeks from February 25 was just yesterday, so at this point the longarmer is at most 1 day "late". And she originally said she would "try" to get it done in 2 weeks, but apparently didn't promise? And that estimate was before she had received the quilt, so she didn't know for sure when it would arrive or what else would be on her plate by the time it came. Like Krista, I don't understand why you would have contacted her after one week. Once she puts your quilt on the frame, she may finish it in a day or two, so she wouldn't have necessarily even looked at it during the first week, especially if she's been ill. Unless you gave her a time by which you needed the quilt and had an agreement that it would be done by then, I don't think that waiting until the end of this month is unreasonable, and I certainly wouldn't feel that the quilt was being held hostage.
On the other hand, it's your quilt, and you can definitely ask for it back if the timing is not working out for you. You might be expected to pay the postage in both directions, if there was no promise of when the quilt would be finished. It sounds like there may have been a lack of communication in both directions. This is one reason why a good written agreement should be in place, to protect both parties and to clarify the expectations for both of you.